As filed with the Securities and Exchange Commission on February 28, 1997
Registration No. 2-92136
File No. 811-4062
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
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Pre-Effective Amendment No. / /
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Post-Effective Amendment No. 29 / X /
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / X /
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Amendment No. 32
GAM FUNDS, INC.
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(Exact Name of Registrant as Specified in Charter)
135 East 57th Street, New York, New York 10022
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(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (212) 407-4600
GAM FUNDS, INC. Copy to:
135 East 57th Street, James B. Sitrick, Esq.
New York, New York 10022 Coudert Brothers
(Name and Address of Agent for Service) 1114 Avenue of the Americas
New York, New York 10036
Approximate Date of Proposed Public Offering: Effective date of this
Post-Effective Amendment.
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ X ] on April 30, 1998 pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on (date) pursuant to paragraph (a)(ii) of rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for
a previously filed post-effective amendment.
<PAGE>
Page 1 of pages
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INDEX TO EXHIBITS APPEARS ON PAGE
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GAM FUNDS, INC.
Contents
This Registration Statement on Form N-1A consists of the following:
1. Facing Sheet
2. Cross-Reference Sheet
3. Part A - Prospectus
4. Part B - Statement of Additional Information
5. Part C - Other Information
6. Signature Sheet
<PAGE>
GAM FUNDS, INC.
Cross-Reference Sheet pursuant to Rule 495(a)
Form N-1A
Item No.
Part A Heading in Prospectus
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1. Cover Page Cover Page
2. Synopsis Expenses; Summary
3. Condensed Financial Information Financial Highlights
4. General Description of Investment Objective and
Registrant Policies and Risk Considerations
5. Management of the Fund Management of the Funds
6. Capital Stock and Other Description of Shares; Shareholder
Securities Transactions and Services;
Additional Information
7. Purchase of Securities Shareholder Transactions and Services;
Being Offered Management of the Funds
8. Redemption or Repurchase Redemption of Shares
9. Pending Legal Proceedings N.A.
<PAGE>
GLOBAL ASSET MANAGEMENT(R)
GAM FUNDS, INC.
PROSPECTUS
APRIL 30, 1998
GAM GLOBAL FUND
GAM INTERNATIONAL FUND
GAM PACIFIC BASIN FUND
GAM JAPAN CAPITAL FUND
GAM ASIAN CAPITAL FUND
GAM EUROPE FUND
GAM NORTH AMERICA FUND
GAMERICA CAPITAL FUND
GAM Funds, Inc. (the "Company") is a diversified open-end management investment
company which offers investors the opportunity to invest in eight different
portfolios (the "Funds") investing primarily in equity securities.
This Prospectus sets forth concisely information a prospective investor should
know about each GAM Fund before investing. Investors are advised to read and
retain this Prospectus for future reference. The Company has filed a Statement
of Additional Information dated April 30, 1998 with the Securities and Exchange
Commission. Such Statement is incorporated by reference in this Prospectus, and
is available without charge upon request at the address and telephone number
indicated below.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION ("SEC") OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SEC
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
GAM FUNDS, INC.
135 East 57th Street, New York, NY 10022
Tel: (800) 426-4685 Fax: (212) 407-4684
Internet: http://www.usinfo.gam.com
GAM(R)
<PAGE>
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Table of Contents
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Summary ................................................................. 1
Investor Expenses......................................................... 2
Financial Highlights...................................................... 4
Investment Objectives and Policies and Risk Considerations................ 15
Shareholder Transactions and Services..................................... 21
Purchasing Shares....................................................... 21
Selling Shares.......................................................... 24
Exchanges............................................................... 28
Other Account Services.................................................. 28
Dividends and Tax Matters............................................... 29
Management of the Funds................................................... 29
Description of Shares..................................................... 32
Additional Information.................................................... 32
Purchase Application................................................. Back Cover
<PAGE>
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SUMMARY
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INVESTMENT OBJECTIVE AND POLICIES. The investment objective of each Fund
is to seek long-term capital appreciation. Each Fund seeks to achieve this
objective by investing in the particular geographic region established pursuant
to its own investment policy. Each Fund employs its own strategy and has its own
risk/reward profile. The Funds are not guaranteed to achieve their objective.
PRINCIPAL RISKS. GAM International, GAM Europe, GAM Pacific Basin, GAM
Asian Capital and GAM Japan Capital Funds each invest primarily in securities of
foreign issuers. GAM Global and GAM North America Funds and, to a lesser extent,
GAMerica Capital Fund, may invest in securities of foreign issuers. Generally,
investments in securities of foreign issuers involve greater risks than
investments in United States issuers. Certain investment techniques that may be
utilized by the Funds, such as hedging and leveraging techniques, also involve
risk. Because investors could lose money by investing in the Funds, investors
should be sure to read and understand these and all risk factors associated with
an investment in the Funds.
INVESTMENT ADVISERS AND UNDERWRITER. The Funds are managed by GAM
International Management Limited, a London-based affiliate of the Global Asset
Management (GAM) Group of companies, an international investment advisory
organization with approximately $11 billion under management and offices or
affiliates in Bermuda, New York, London, Zurich, Hong Kong, Tokyo, Singapore,
Edinburgh, Dublin and the Isle of Man. Fayez Sarofim & Co., which serves as
co-investment adviser for GAM North America Fund, is based in Houston, Texas and
manages aggregate assets of approximately $45 billion. GAM Services, Inc., an
affiliate of GAM, serves as principal underwriter for the Funds' shares. Shares
are continuously offered to the public through securities dealers and other
financial services firms that have entered into an agreement with GAM Services
Inc. to sell shares of the Funds.
MINIMUM INVESTMENT/SALES CHARGES/CDSC. The minimum initial investment is
$5,000 ($2,000 for IRA accounts); shareholders may make subsequent purchases for
as little as $500. Purchases of shares may be subject to a maximum initial sales
charge of 5% of the purchase price in the case of Class A shares, or 3.5% in the
case of Class D shares. Class B shares are sold without an initial sales charge
but are subject to a contingent deferred sales charge ("CDSC"), scaled down from
5.0% to 1.0%, payable upon most redemptions within six years after purchase.
Class C shares are sold without an initial sales charge but are subject to a
CDSC of 1.0% on most redemptions made within one year after purchase.
DIVIDENDS AND DISTRIBUTIONS. Each Fund intends to distribute annually
all of its net investment income and net realized capital gains. Dividends and
distributions may be reinvested automatically without a sales load.
ADDITIONAL FUND FEATURES. The Funds offer Exchanges at Net Asset Value;
Reduced Sales Charges through a Statement of Intention and Rights of
Accumulation; Telephone Exchanges and Redemptions; Automatic Investment and
Systematic Withdrawal Plans; and money market investment privileges through the
GAM Money Market Account.
1
<PAGE>
INVESTOR EXPENSES
Fund investors pay various expenses either directly or indirectly. The figures
below show the expenses for the past year, adjusted to reflect any changes.
Future expenses may be greater or less.
<TABLE>
<CAPTION>
GAM INTERNATIONAL FUND GAM GLOBAL FUND GAM PACIFIC BASIN FUND
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
A B** C** D* A B** C** D* A B** C** D*
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed On Purchases
(as a percentage of offering price)(1) 5% None None 3.5% 5% None None 3.5% 5% None None 3.5%
Maximum Deferred Sales Charge None(2) 5% 1% None None(2) 5% 1% None None(2) 5% 1% None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of Average Net Assets)
Management Fees (after expense
reimbursement) 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
12b-1 Fees (4) 0.30% 1.00% 1.00% 0.50% 0.30% 1.00% 1.00% 0.50% 0.30% 1.00% 1.00% 0.50%
Other Expenses (5) 0.38% 0.38% 0.38% 0.32% 0.53% 0.53% 0.53% 0.51% 0.68% 0.68% 0.68% 0.58%
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Total Fund Operating Expenses (4) 1.68% 2.38% 2.38% 1.82% 1.83% 2.53% 2.53% 2.01% 1.98% 2.68% 2.68% 2.08%
==== ==== ==== ==== ==== ==== ==== ==== ==== ==== ==== ====
</TABLE>
<TABLE>
<CAPTION>
GAM
GAMERICA ASIAN
GAM NORTH GAM JAPAN CAPITAL CAPITAL
GAM EUROPE FUND AMERICA FUND CAPITAL FUND FUND FUND
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
A B** C** A B* C* A B** C** A A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed On Purchases
(as a percentage of offering price) (1) 5% None None 5% None None 5% None None 3.5% 5%
Maximum Deferred Sales Charge None(2) 5% 1% None (2) 5% 1% None(2) 5% 1% None(2) None(2)
ANNUAL FUND OPERATING EXPENSES
(as a percentage of Average Net Assets)
Management Fees (after expense
reimbursement) 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
12b-1 Fees (4) 0.30% 1.00% 1.00% 0.30% $1.00 $1.00 0.30% 1.00% 1.00% 0.30% 0.30%
Other Expenses (5) 0.51% 0.51% 0.51% 0.64% 0.64% 0.64% 0.85% 0.85% 0.85% 2.15% 0.51%
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Total Fund Operating Expenses (4) 1.81% 2.51% 2.51% 1.94%(3) 2.64% 2.64% 2.15% 2.85% 2.85% 3.45% 1.81%
==== ==== ==== ==== ==== ==== ==== ==== ==== ==== ====
</TABLE>
* Class D shares are currently offered only by GAM International Fund, GAM
Global Fund and GAM Pacific Basin Fund.
** Class B and Class C shares are currently offered only by GAM International
Fund, GAM Global Fund, GAM Pacific Fund, GAM Europe Fund, GAM North America
Fund and GAM Japan Capital Fund.
2
<PAGE>
EXAMPLE
The table below shows what an investor would pay if he or she invested $1,000
over the various time frames indicated. The example assumes reinvestment of all
dividends, an average annual return of 5%, and that "Total Fund Operating
Expenses" remain the same each year.
<TABLE>
<CAPTION>
GAM INTERNATIONAL FUND GAM GLOBAL FUND GAM PACIFIC BASIN FUND
CLASS A CLASS B CLASS C CLASS D CLASS A CLASS B CLASS C CLASS D CLASS A CLASS B CLASS C CLASS D
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 Year $ 66 76 35 $ 53 $ 68 77 36 $ 55 $ 69 79 38 $ 55
3 Year 100 108 75 90 105 113 80 96 109 117 84 98
5 Year 137 153 129 130 144 160 137 139 151 168 144 143
10 Year 239 281 281 241 254 297 297 261 269 312 312 268
</TABLE>
<TABLE>
<CAPTION>
GAM
GAMERICA ASIAN
CAPITAL CAPITAL
GAM EUROPE FUND GAM NORTH AMERICA FUND GAM JAPAN CAPITAL FUND FUND FUND
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 Year $ 67 77 36 $ 69 $ 78 $ 37 $ 71 80 39 $ 83 $ 67
3 Year 104 110 78 108 114 82 114 120 88 151 104
5 Year 143 156 134 149 162 140 160 173 150 220 143
10 Year 252 285 285 265 297 297 286 318 318 404 252
</TABLE>
This example is for comparison purposes only and is not a representation of
actual expenses and returns, either past or future.
NOTES TO TABLES
(1) The sales charge is reduced for investments of $100,000 or more, declining
to zero for large order purchases of $1 million or more. The sales charge may be
waived for certain investors. See "Shareholder Transactions and Services --
Purchasing Shares."
(2) Except for investments of $1 million or more. See "Shareholder Transactions
and Services -- Purchasing Shares".
(3) In the absence of an expense reimbursement, total expenses for GAM Asian
Capital Fund would have been 5.44%.
(4) Because of the 12b-1 fee, long term shareholders of Class B, Class C and
Class D shares may indirectly pay more than the equivalent of the maximum
permitted front-end sales charge.
(5) Other expenses include custodian, transfer agent, administrative, legal and
accounting fees and expenses. The Funds' expense ratios may be higher than those
of most registered investment companies since the cost of maintaining custody of
foreign securities is higher than those for most domestic funds and the rate of
the advisory fee paid by each Fund exceeds that of most registered investment
companies.
3
<PAGE>
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FINANCIAL HIGHLIGHTS
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Unless otherwise noted, the selected financial information below is for the
fiscal periods ending December 31 of each year. The accounting firm of Coopers &
Lybrand L.L.P. audited the Funds' financial statements for the year ended
December 31, 1997. Their report is included in the Funds' Annual Report, which
contains further information about the performance of the Funds. A copy of the
Annual Report is incorporated by reference into the Statement of Additional
Information and available at no charge upon request to the Funds. The Funds'
financial statements for periods prior to 1996 were audited by other independent
accountants. Expense and income ratios and portfolio turnover rates have been
annualized for periods less than one year. Total returns for periods of less
than one year are not annualized. Classes B and C were not in existence for the
period represented and therefore are not reflected in the pertinent charts which
follow.
<TABLE>
<CAPTION>
GAM INTERNATIONAL FUND For the Periods
05-Sept-95+
to
1997 1997 1996 1996 1995 31-Dec-95 1994
Class A Class D Class A Class D Class A Class D Class A
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding
throughout the period)*
Net asset value
Beginning of period $23.15 $23.07 $21.37 $21.35 $17.21 $20.46 $23.90
------ ------ ------ ------ ------ ------ ------
Income from investment operations
Net investment income 0.08 0.01 0.57 0.45 0.52 0.10 0.34
Net realized and unrealized
gain/(loss) on investments 6.58 6.59 1.34 1.32 4.64 1.78 (2.58)
------ ------ ------ ------ ------ ------ ------
Total from investment operations 6.66 6.60 1.91 1.77 5.16 1.88 (2.24)
------ ------ ------ ------ ------ ------ ------
Less distributions
Dividends from net
investment income (0.18) (0.16) (0.09) (0.01) (0.47) (0.46) (0.66)
Distributions from net
realized gains (1.17) (1.17) (0.04) (0.04) (0.53) (0.53) (3.79)
------ ------ ------ ------ ------ ------ ------
Total distributions (1.35) (1.33) (0.13) (0.05) (1.00) (0.99) (4.45)
------ ------ ------ ------ ------ ------ ------
Net asset value
End of period $28.46 $28.34 $23.15 $23.07 $21.37 $21.35 $17.21
====== ====== ====== ====== ====== ====== ======
TOTAL RETURN
(without deduction of
sales load) 28.93% 28.78% 8.98% 8.33% 30.09% 9.26% (10.23%)
Net assets, end of period
(000 omitted) $1,793,665 $99,283 $1,009,819 $38,716 $560,234 $8,714 $158,336
RATIOS TO AVERAGE NET ASSETS:
Expenses 1.68% 1.82% 1.56% 2.06% 1.57% 2.22% 1.60%
Net investment income 0.28% 0.05% 2.70% 2.13% 3.89% 1.90% 2.74%
Portfolio turnover rate 48% 48% 82% 82% 34.97% 34.97% 110.48%
Average Commission Rate Paid 0.0444 0.0444 0.0202 0.0202 -- -- --
BANK LOANS
Amount outstanding at end of period
(000 omitted) -- -- -- -- -- -- --
Average amount of bank loans
outstanding during the period
(000 omitted) -- -- -- -- -- -- --
Average number of shares outstanding
during the period (monthly average)
(000 omitted) -- -- -- -- -- -- --
Average amount of debt per share
during the period -- -- -- -- -- -- --
+ Commencement of offering of Class D shares.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
For the Periods
1993 1992 1991 1990 1989 1988 1987
Class A Class A Class A Class A Class A Class A Class A
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding
throughout the period)*
Net asset value
Beginning of period $14.56 $14.86 $12.87 $17.02 $14.81 $13.29 $21.91
------ ------ ------ ------ ------ ------ ------
Income from investment operations
Net investment income 0.25 0.71 0.36 0.17 0.03 0.04 0.11
Net realized and unrealized
gain/(loss) on investments 10.38 0.28 1.64 (1.41) 3.21 2.72 2.38
------ ------ ------ ------ ------ ------ ------
Total from investment operations 10.63 0.43 2.00 (1.24) 3.24 2.76 2.49
------ ------ ------ ------ ------ ------ ------
Less distributions
Dividends from net
investment income (0.34) (0.43) (0.01) -- -- (0.06) (0.23)
Distributions from net
realized gains (0.95) (0.30) -- (2.91) (1.03) (1.18) (10.88)
------ ------ ------ ------ ------ ------ ------
Total distributions (1.29) (0.73) (0.01) (2.91) (1.03) (1.24) (11.11)
------ ------ ------ ------ ------ ------ ------
Net asset value
End of period $23.90 $14.56 $14.86 $12.89 $17.02 $14.81 $13.29
====== ====== ====== ====== ====== ====== ======
TOTAL RETURN
(without deduction of
sales load) 79.96% 3.08% 15.56% (7.30%) 22.46% 21.51% 12.05%
Net assets, end of period
(000 omitted) $80,776 $41,032 $40,355 $23,450 $20,537 $19,638 $21,167
RATIOS TO AVERAGE NET ASSETS
Expenses 1.99% 2.03% 2.11% 2.30% 2.74% 2.76% 2.23%
Net investment income 2.28% 4.85% 3.25% 1.32% 0.19% 0.27% 0.38%
Portfolio turnover rate 98.45% 109.16% 160.67% 253.89% 32.52% 22.86% 79.58%
Average Commission Rate Paid -- -- -- -- -- -- --
BANK LOANS
Amount outstanding at end
of period (000 omitted) $9,557 $2,743 -- -- -- -- --
Average amount of bank loans
outstanding during the period
(000 omitted) $2,042 $901 -- -- -- -- --
Average number of shares outstanding
during the period (monthly average)
(000 omitted) 2,700 2,790 -- -- -- -- --
Average amount of debt per share
during the period $0.76 $0.32 -- -- -- -- --
* Per share amounts for years ended prior to December 31, 1995 have been
restated to reflect a 10-for-1 stock split effective December 19, 1995.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
GAM GLOBAL FUND
For the Periods
05-Sep-95+
to
1997 1997 1996 1996 1995 31-Dec-95 1994
Class A Class D Class A Class D Class A Class D Class A
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding
throughout the period)*
Net asset value
Beginning of period $14.35 $14.22 $13.51 $13.48 $10.60 $13.46 $17.92
------ ------ ------ ------ ------ ------ ------
Income from investment operations
Net investment income (0.04) (0.09) 0.16 0.07 0.35 -- 0.19
Net realized and unrealized
gain/(loss) on investments 5.04 5.02 1.55 1.47 3.48 0.92 (2.94)
------ ------ ------ ------ ------ ------ ------
Total from investment operations 5.00 4.93 1.71 1.54 3.83 0.92 (2.75)
------ ------ ------ ------ ------ ------ ------
Dividends from net
investment income (0.02) (0.03) (0.08) (0.01) (0.30) (0.28) (0.49)
Distributions from net
realized gains (0.62) (0.62) (0.79) (0.79) (0.62) (0.62) (4.08)
------ ------ ------ ------ ------ ------ ------
Total distributions (0.64) (0.65) (0.87) (0.80) 0.92 (0.90) (4.57)
------ ------ ------ ------ ------ ------ ------
Net asset value
End of period $18.71 $18.50 $14.35 $14.22 $13.51 $13.48 $10.60
====== ====== ====== ====== ====== ====== ======
TOTAL RETURN
(without deduction of
sales load) 34.95% 34.80% 12.74% 11.54% 36.25% 6.97% (16.15%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $65,739 $3,768 $19,583 $815 $26,161 $295 $19,940
Ratios to average net assets
Expenses 1.83% 2.01% 2.26% 2.88% 2.16% 2.81% 2.29%
Net investment income/(loss) (0.25%) (0.53%) 1.17% 0.52% 2.96% (0.09%) 0.91%
Portfolio turnover rate 48% 48% 107% 107% 60.18% 60.18% 123.33%
Average Commission Rate Paid 0.0733 0.0733 0.0255 0.0255 -- -- --
BANK LOANS
Amount outstanding at end of period -- -- -- -- -- -- --
(000 omitted)
Average amount of bank loans
outstanding during the period
(000 omitted) -- -- -- -- -- -- --
Average number of shares outstanding
during the period (monthly average)
(000 omitted) -- -- -- -- -- -- --
Average amount of debt per share
during the period -- -- -- -- -- -- --
+ Commencement of offering of Class D shares.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
For the Periods
1993 1992 1991 1990 1989 1988 1987
Class A Class A Class A Class A Class A Class A Class A
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding
throughout the period)*
Net asset value
Beginning of period $10.33 $11.37 $10.28 $13.14 $11.08 $9.26 $10.47
------ ------ ------ ------ ------ ------ ------
Income from investment operations
Net investment income 0.24 0.64 0.28 0.06 0.04 (0.01) 0.12
Net realized and unrealized
gain/(loss) on investments 7.46 ($ 1.15) $ 0.81 (1.54) 2.56 2.25 (0.38)
------ ------ ------ ------ ------ ------ ------
Total from investment operations 7.70 (0.51) 1.09 (1.48) 2.60 2.24 (0.26)
------ ------ ------ ------ ------ ------ ------
Dividends from net
investment income (0.11) (0.28) -- -- (0.03) -- (0.12)
Distributions from net
realized gains -- (0.25) -- (1.38) (0.51) (0.42) (0.83)
------ ------ ------ ------ ------ ------ ------
Total distributions (0.11) (0.53) -- (1.38) (0.54) (0.42) (0.95)
------ ------ ------ ------ ------ ------ ------
Net asset value
End of period $17.92 $10.33 $11.37 $10.28 $13.14 $11.08 $9.26
====== ====== ====== ====== ====== ====== ======
TOTAL RETURN
(without deduction of sales load)75.30% (4.65%) 10.61% (11.26%) 24.20% 25.04% (2.47%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $33,416 $19,763 $23,990 $23,577 $22,794 $17,805 $18,229
Ratios to average net assets
Expenses 2.68% 2.37% 2.33% 2.45% 2.68% 2.94% 2.09%
Net investment income/(loss) 1.88% 5.25% 2.20% 0.58% 0.36% (0.05%) 0.90%
Portfolio turnover rate 106.73% 118.41% 180.52% 250.46% 31.28% 34.09% 67.35%
Average Commission Rate Paid -- -- -- -- -- -- --
BANK LOANS
Amount outstanding at end of period
(000 omitted) $2,165 $9,010 -- -- -- -- $1,900
Average amount of bank loans
outstanding during the period
(000 omitted) $2,600 $1,401 -- -- -- -- $158
Average number of shares outstanding
during the period (monthly average)
(000 omitted) 1,780 2,130 -- -- -- -- 2,200
Average amount of debt per share
during the period $ 1.48 $0.66 -- -- -- -- $0.72
* Per share amounts for periods ended prior to December 31, 1995 have been
restated to reflect a 10-for-1 stock split effective December 19, 1995.
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
GAM PACIFIC BASIN FUND
For the Periods
05-Sep-95+
to
1997 1997 1996 1996 1995 31-Dec-95 1994
Class A Class D Class A Class D Class A Class D Class A
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding
throughout the period)*
Net asset value
Beginning of period $15.26 $15.20 $16.97 $16.96 $17.62 $17.36 $19.20
------ ------ ------ ------ ------ ------ ------
Income from investment operations
Net investment income/(loss) 0.00 0.01 0.04 (0.10) -- (0.02) (0.05)
Net realized and unrealized
gain/(loss) on investments (4.45) (4.47) (0.11) (0.11) 0.61 0.26 1.36
------ ------ ------ ------ ------ ------ ------
Total from investment operations (4.45) (4.48) (0.07) (0.21) 0.61 0.24 1.31
------ ------ ------ ------ ------ ------ ------
Less distributions
Dividends from net
investment income -- -- (0.74) (0.65) -- -- --
Distributions from net
realized gains (1.12) (1.12) (0.90) (0.90) (1.26) (0.64) (2.89)
------ ------ ------ ------ ------ ------ ------
Total distributions (1.12) (1.12) (1.64) (1.55) (1.26) (0.64) (2.89)
------ ------ ------ ------ ------ ------ ------
Net asset value
End of period $9.69 $9.62 $15.26 $15.20 $16.97 $16.96 $17.62
====== ====== ====== ====== ====== ====== ======
TOTAL RETURN
(without deduction of
sales load) (30.00%) (30.18%) (0.39%) (1.19%) 4.50% 2.35% 7.41%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $23,046 $1,583 $49,808 $1,878 $53,944 $1,547 $48,527
Ratios to average net assets
Expenses 1.98% 2.08% 1.76% 2.28% 1.98% 2.63% 1.78%
Net investment income 0.02% (0.09%) 0.22% (0.57%) (0.07%) (1.49%) (0.35%)
Portfolio turnover rate 42% 42% 46% 46% 64.01% 64.01% 29.11%
Average Commission Rate Paid 0.0168 0.0168 0.0251 0.0251
BANK LOANS:
Amount outstanding at end of period
(000 omitted) $2,102 $144 -- -- -- -- --
Average amount of bank
loans outstanding
during the period (000 omitted) $5.8 $0.4 -- -- -- -- --
Average number of shares
outstanding during the period
(monthly average) (000 omitted) 3,265 140 -- -- -- -- --
Average amount of debt per share
during the period $0.002 $0.003 -- -- -- -- --
+ Commencement of offering of Class D shares.
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
For the Periods
++06-May-87
to
1993 1992 1991 1990 1989 1988 31-Dec-87
Class A Class A Class A Class A Class A Class A Class A
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding
throughout the period)*
Net asset value
Beginning of period $13.14 $13.77 $11.93 $14.21 $10.16 $8.25 $10.00
------ ------ ------ ------ ------ ------ ------
Income from investment operations
Net investment income (0.03) 0.01 0.17 (0.04) (0.22) (0.41) (0.19)
Net realized and unrealized
gain/(loss) on investments 6.57 (0.06) 1.81 (1.11) 4.61 (2.32) (1.56)
------ ------ ------ ------ ------ ------ ------
Total from investment operations 6.54 (0.05) (1.98) (1.15) 4.39 1.91 (1.75)
------ ------ ------ ------ ------ ------ ------
Less distributions
Dividends from net
investment income (0.04) (0.09) -- -- -- -- --
Distributions from net
realized gains (0.44) (0.49) (0.14) (1.13) (0.34) -- --
------ ------ ------ ------ ------ ------ ------
Total distributions (0.48) (0.58) (0.14) (1.13) (0.34) -- --
------ ------ ------ ------ ------ ------ ------
Net asset value
End of period $19.20 $13.14 $13.77 $11.93 $14.21 $10.16 $8.25
====== ====== ====== ====== ====== ====== ======
TOTAL RETURN
(without deduction of
sales load) 51.52% (0.37%) 16.71% (8.21%) 43.34% 23.21% (17.55%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $40,719 $28,206 $35,849 $20,811 $7,490 $4,341 $3,689
Ratios to average net assets
Expenses 1.93% 2.03% 2.29% 3.74% 5.93% 5.92% 6.80%
Net investment income/(loss) (0.29%) 0.09% 0.78% (0.31%) (3.39%) (3.29%) (4.47%)
Portfolio turnover rate 91.07% 74.78% 78.80% 103.05% 152.89% 147.87% 85.53%
Average Commission Rate Paid -- -- -- -- -- -- --
* Per share amounts for periods ended prior to December 31, 1995 have been
restated to reflect a 10-for-1 stock split effective
December 19, 1995.
++ Commencement of operations
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
GAM EUROPE FUND
For the Periods
+01-Jan-90
to
1997 1996 1995 1994 1993 1992 1991 31-Dec-90
Class A Class A Class A Class A Class A Class A Class A Class A
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding
throughout the period)*
Net asset value
Beginning of period $11.85 $10.04 $8.66 $8.93 $7.34 $8.33 $8.39 $10.00
------ ------ ------ ------ ------ ----- ----- ------
Income from investment operations
Net investment income 0.02 0.07 0.07 -- 0.24 0.40 0.22 (0.02)
Net realized and unrealized
gain/(loss) on investments 3.15 2.06 1.38 (0.27) 1.41 (0.78) (0.28) (1.59)
------ ------ ------ ------ ------ ------ ------ ------
Total from investment operations 3.17 2.13 1.45 (0.27) 1.65 (0.38) (0.06) (1.61)
------ ------ ------ ------ ------ ------ ------ ------
Less distributions
Dividends from net
investment income (0.06) (0.01) (0.06) -- (0.06) (0.22) -- --
Distributions from net
realized gains (2.39) (0.31) (0.01) -- -- (0.39) -- --
------ ------ ------ ------ ------ ------ ------ ------
Total distributions (2.45) (0.32) (0.07) -- (0.06) (0.61) -- --
------ ------ ------ ------ ------ ------ ------ ------
Net asset value
End of period $12.57 $11.85 $10.04 $8.66 $8.93 $7.34 $8.33 $8.39
====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN
(without deduction of
sales load) 27.55% 21.32% 16.77% (3.11%) 22.68% (4.91%) (0.70%) (16.07%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $39,101 $25,127 $22,961 $32,233 $14,398 $17,264 $13,558 $9,186
Ratios to average net assets
Expenses 1.81% 1.89% 2.12% 2.35% 2.64% 2.47% 2.76% 3.57%
Net investment income/(loss) 0.15% 0.59% 0.75% 0.06% 1.05% 5.06% 2.17% (0.22%)
Portfolio turnover rate 80% 76% 145.16% 74.96% 181.51% 72.20% 232.55% 325.62%
Average Commission Rate Paid 0.0352 0.0168 -- -- -- -- -- --
BANK LOANS:
Amount outstanding at end of
period (000 omitted) $884 -- -- -- $1,860 $1,177 -- --
Average amount of bank loans
outstanding during the period
(000 omitted) $2.4 -- $123 -- $521 $347 -- --
Average number of shares outstanding
during the period (monthly average)
(000 omitted) 2,688 -- 3,900 -- 1,680 2,400 -- --
Average amount of debt per share
during the period $0.001 -- $0.32 -- $0.31 $0.14 -- --
* Per share amounts for periods ended prior to December 31, 1995 have been restated to reflect a 10-for-1
stock split effective December 19, 1995.
+ Commencement of operations
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
GAM NORTH AMERICA FUND
For the Periods
1997 1996 1995 1994 1993 1992 1991 +1990
Class A Class A Class A Class A Class A Class A Class A Class A
PER SHARE OPERATING PERFORMANCE
(for a share outstanding
throughout the period)*
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value
Beginning of period $13.56 $11.93 $ 9.14 $12.80 $13.63 $13.35 $10.21 $10.00
------ ------ ------ ------ ------ ------ ------ ------
Income from investment operations
Net investment income (loss) 0.00 (0.05) -- 0.04 0.19 0.07 0.06 (0.22)
Net realized and unrealized
gain/(loss) on investments 3.99 2.93 2.83 0.23 (0.46) 0.25 3.08 0.43
------ ------ ------ ------ ------ ------ ------ ------
Total from investment operations 3.99 2.88 2.83 0.27 (0.27) 0.32 3.14 0.21
------ ------ ------ ------ ------ ------ ------ ------
Less distributions
Dividends from net
investment income -- -- -- (0.23) (0.07) (0.03) -- --
Distributions from net
realized gains (0.23) (1.25) (0.04) (3.70) (0.49) (0.01) -- --
------ ------ ------ ------ ------ ------ ------ ------
Total distributions (0.23) (1.25) (0.04) (3.93) (0.56) (0.04) -- --
------ ------ ------ ------ ------ ------ ------ ------
Net asset value
End of period $17.32 $13.56 $11.93 $ 9.14 $12.80 $13.63 $13.35 $10.21
====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN
(without deduction of
sales load) 29.41% 24.10% 30.90% 2.97% (2.09%) 2.42% 30.69% 2.14%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $10,966 $5,853 $5,981 $1,887 $3,289 $11,781 $12,290 $1,862
Ratios to average net assets
Expenses, net of reimbursement 1.94% 2.61% **2.98% **2.54% 2.10% 2.43% 2.96% **11.52%
Net investment income 0% (0.39%) 0.01% 0.37% 0.69% 0.47% 0.45% (5.49%)
Portfolio turnover rate 15% 9% 8.57% 3.00% 3.42% 20.38% 3.44% 0.00%
Average Commission Rate Paid 0.0600 0.06
* Per share amounts for years ended prior to December 31, 1995 have been
restated to reflect a 10-for-1 stock split effective
December 19, 1995.
** In the absence of the expense reimbursement, expenses on an annualized basis
would have represented 3.27%, 5.81% and 14.31% of the average net assets,
respectively, for the years ended December 31, 1995, 1994 and 1990.
+ Commenced operations January 1, 1990. Fayez Sarofim & Co. was appointed
co-investment adviser of the Fund effective June 20, 1990.
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
GAM JAPAN CAPITAL FUND
For the Periods
+01-Jul-94
to
1997 1996 1995 31-Dec-94
Class A Class A Class A Class A
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding
throughout the period)*
Net asset value
Beginning of period $9.39 $10.16 $ 9.62 $10.00
----- ------ ------ ------
Income from investment operations
Net investment income (0.10) (0.05) (0.07) 0.02
Net realized and unrealized
gain/(loss) on investments (0.11) 0.07 0.69 (0.40)
----- ------ ------ ------
Total from investment operations (0.21) 0.02 0.62 (0.38)
----- ------ ------ ------
Less distributions
Dividends from net investment
income -- (0.70) (0.05) --
Distributions from net realized gains (0.74) (0.09) (0.03) --
----- ----- ------ ------
Total distributions (0.74) (0.79) (0.08) --
----- ----- ------ ------
Net asset value
End of period $8.44 $9.39 $10.16 $9.62
===== ===== ====== ======
TOTAL RETURN
(without deduction of sales load) (2.58%) 0.15% 6.45% (3.77%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $30,872 $36,504 $13,600 $9,406
Ratios to average net assets
Expenses, net of reimbursement 2.15% 1.84% **3.61% 2.19%
Net investment income/(loss) (1.06%) (0.50%) (2.35%) 0.70%
Portfolio turnover rate 76% 23% 122.38% 7.02%
Average Commission Rate Paid 0.0554 0.0697 -- --
BANK LOANS:
Amount outstanding at end of
period (000 omitted) -- -- -- --
Average amount of bank loans
outstanding during the period
(000 omitted) $145.5
Average number of shares outstanding
during the period (monthly average)
(000 omitted) 3,074 -- -- --
Average amount of debt per share
during the period $0.047 -- -- --
* Per share amounts for periods ended prior to December 31, 1995 have been
restated to reflect a 10-for-1 stock split effective December 19, 1995.
** In the absence of the expense reimbursement, for the period ended December
31, 1995, expenses on an annualized basis would have represented 4.61% of the
average net assets.
+ Commencement of operations
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
GAMERICA CAPITAL FUND
For the Periods
+12-May-95
to
1997 1996 31-Dec-95
Class A Class A Class A
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding
throughout the period)
Net asset value
Beginning of period $10.82 $10.03 $10.00
------ ------ ------
Income from investment operations
Net investment income (loss) (0.24) (0.42) 0.07
Net realized and unrealized
gain/(loss) on investments 4.23 2.22 0.07
------ ------ ------
Total from investment operations 3.99 1.80 0.14
------ ------ ------
Less distributions
Dividends from net investment
income -- -- (0.07)
Distributions from net realized gains (1.38) (1.01) (0.04)
------ ------ ------
Total distributions (1.38) (1.01) (0.11)
------ ------ ------
Net asset value
End of period $13.43 $10.82 $10.03
====== ====== ======
TOTAL RETURN
(without deduction of sales load) 37.28% 18.31% 1.38%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $3,799 $ 1,924 $ 3,029
Ratios to average net assets
Expenses, net of reimbursement* 3.45% 5.16% 3.73%
Net investment income/(loss) (2.04%) (3.79%) 1.36%
Portfolio turnover rate 22% 27% 10.90%
Average Commission Rate Paid 0.0152 0.0533 --
+ Commencement of operations
* In the absence of the expense reimbursement, for the period ended December
31, 1995 and the year ended December 31, 1996, expenses on an annualized
basis would have represented 4.73% and 6.16%, respectively, of the average
net assets.
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
GAM ASIAN CAPITAL FUND
For the Periods
+12-May-95
to
1997 1996 31-Dec-95
Class A Class A Class A
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding
throughout the period)
Net asset value
Beginning of period $9.83 $9.53 $10.00
----- ----- ------
Income from investment operations
Net investment income (loss) 0.09 (0.07) (0.01)
Net realized and unrealized
gain/(loss) on investments (3.48) 0.38 (0.42)
----- ----- ------
Total from investment operations (3.39) 0.31 (0.43)
----- ----- ------
Less distributions
Dividends from net
investment income (0.02) -- --
Distributions from net realized gains (0.40) (0.01) (0.04)
----- ----- -----
Total distributions (0.42) (0.01) (0.04)
----- ----- -----
Net asset value
End of period $6.02 $9.83 $9.53
===== ===== =====
TOTAL RETURN
(without deduction of sales load) (35.34%) 3.28% (4.25%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $824 $5,629 $5,560
Ratios to average net assets
Expenses, net of reimbursement* 1.81% 2.98% 3.11%
Net investment income/(loss) 1.04% (0.75%) (0.17%)
Portfolio turnover rate 68% 86% 17.01%
Average Commission Rate Paid 0.0078 0.0124 --
+ Commencement of operations
* In the absence of the expense reimbursement, for the period ended December
31, 1995 and the years ended December 31, 1996 and 1997, expenses on an
annualized basis would have represented 3.95%, 3.58% and 5.44%, respectively,
of the average net assets.
</TABLE>
PERFORMANCE INFORMATION
The Funds may advertise performance information representing each Fund's
total return for the periods indicated. Total return includes changes in the net
asset value of each Fund's shares and assumes reinvestment of all dividends and
capital gains distributions. Total return therefore reflects the expenses of
each Fund, but does not reflect any taxes due on dividends or distributions paid
to shareholders. The Funds may advertise total return both before and after
deduction of the sales load.
Past results may not be indicative of future performance. The investment
return and principal value of shares of each Fund will fluctuate so that your
shares, when redeemed, may be worth more or less than their original cost.
14
<PAGE>
- --------------------------------------------------------------------------------
Investment Objectives and Policies and Risk Considerations
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES
Each Fund's investment objective is to seek long-term capital
appreciation. To pursue this goal, each Fund has adopted an investment policy
relating to a particular geographic region in which it intends to invest a
substantial portion of its assets. The policy of each Fund is described below.
Although the Funds generally intend to purchase securities for long-term
investment, each Fund may also engage in short-term trading based upon changes
affecting a particular company, industry, country or region or changes in
general market, economic or political conditions. Generally, each Fund expects
to achieve its objective by investing in equity securities (which include but
are not limited to common and preferred stocks and warrants). However, if it is
determined that the long-term capital appreciation of debt securities may equal
or exceed the return on equity securities, then a Fund may be substantially
invested in debt securities of companies or governments and their agencies and
instrumentalities. Each Fund is not required to maintain any particular
proportion of equity or debt securities in its portfolio. Any dividend or
interest income realized by a Fund on its investments will be incidental to its
goal of long-term capital appreciation.
The investment objective of each Fund and the investment policies set
forth below may be changed by the Board of Directors upon written notice to the
shareholders of the affected Fund(s). If there is a change in objective,
shareholders should consider whether the Fund remains an appropriate investment.
In light of each Fund's investment objective and anticipated portfolio, each
Fund should be considered as a vehicle for diversification and not as a balanced
investment program. There is no assurance that each Fund will achieve its
investment objective.
Each Fund has adopted the following investment policy relating to the
geographic areas in which it may invest. In the case of the GAM Pacific Basin,
GAM Japan Capital, GAM Asian Capital, GAM Europe, GAM North America and GAMerica
Capital Funds, each Fund intends to invest substantially all of its assets in
the region dictated by its investment policy and, under normal market
circumstances, will invest at least 65% of its total assets in securities of
companies or governments in the relevant geographic area.
GAM GLOBAL FUND may invest in securities issued by companies in any
country of the world, including the United States, and will normally invest in
securities issued by companies in the United States, Canada, the United Kingdom,
Continental Europe and the Pacific Basin. Under normal market conditions, GAM
Global Fund will invest in securities of companies in at least three different
countries.
GAM INTERNATIONAL FUND may invest in securities issued by companies in
any country other than the United States and will normally invest in securities
issued by companies in Canada, the United Kingdom, Continental Europe and the
Pacific Basin. Under normal market conditions, GAM International Fund will
invest in securities of companies in at least three foreign countries. For
temporary defensive purposes, GAM International Fund may invest in debt
securities of United States companies and the United States government and its
agencies and instrumentalities.
GAM PACIFIC BASIN FUND may invest primarily in securities of companies
in the Pacific Basin, including Japan, Hong Kong, Singapore, Malaysia, Thailand,
Vietnam, Indonesia, the Philippines, Korea, China, Taiwan, India, Australia and
New Zealand.
GAM JAPAN CAPITAL FUND may invest primarily in securities of companies
in Japan.
GAM ASIAN CAPITAL FUND may invest primarily in securities issued by
companies in Asia other than Japan. Countries in Asia include Hong Kong,
Singapore, Malaysia, Thailand, Vietnam, Indonesia, the Philippines, Korea,
China, Taiwan, India, Myanmar, Pakistan, Bangladesh and Sri Lanka.
15
<PAGE>
GAM EUROPE FUND may invest primarily in securities issued by companies
in Europe, including the United Kingdom, Ireland, France, Germany, Denmark,
Norway, Sweden, Finland, Iceland, Switzerland, Austria, Belgium, Spain,
Portugal, Italy, Greece, Hungary, Poland, the Czech Republic and Slovakia.
GAM NORTH AMERICA FUND may invest primarily in securities issued by
companies in the United States and Canada.
GAMERICA CAPITAL FUND may invest primarily in securities of companies in
the United States.
A company will be considered to be in or from a particular country for
purposes of the preceding paragraphs if (a) at least 50% of the company's assets
are located in the country or at least 50% of its total revenues are derived
from goods or services produced in the country or sales made in the country; (b)
the principal trading market for the company's securities is in the country; or
(c) the company is incorporated under the laws of the country.
Each Fund will seek investment opportunities in all types of companies,
including smaller companies in the earlier stages of development. In making
investment decisions, each Fund will rely on the advice of its Investment
Adviser(s) and its own judgment rather than on any specific objective criteria.
The debt securities in which each Fund may invest are not required to
have any rating and may include securities of companies in default of interest
or principal payment obligations. None of the Funds may invest more than 5% of
its assets in debt securities which are rated lower than "investment grade" by a
rating service. Debt securities rated in the lowest "investment grade" by a
rating service (e.g., bonds rated BBB by S&P) or lower have speculative
characteristics, and changes in economic or other circumstances are more likely
to lead to a weakened capacity of the issuers of such securities to make
principal or interest payments than issuers of higher grade securities. A
decrease in the rating of debt securities held by a Fund may cause the Fund to
have more than 5% of its assets invested in debt securities which are not
"investment grade". In such a case, the Fund will not be required to sell such
debt securities.
Each Fund may, for temporary defensive purposes, invest in short-term
debt securities of foreign and United States companies, foreign governments and
the United States government, its agencies and instrumentalities, as well as in
money market instruments denominated in United States dollars or a foreign
currency. These money market instruments include negotiable or short-term
deposits with domestic or foreign banks with total assets of at least $50
million; high quality commercial paper; and repurchase agreements maturing
within seven days with domestic or foreign dealers, banks and other financial
institutions deemed to be creditworthy under guidelines approved by the Board of
Directors.
In order to have funds available for redemption and investment
opportunities, each Fund may hold a portion of its portfolio in cash or United
States and foreign money market instruments. At no point in time will more than
35% of each Fund's portfolio be so invested and/or held in cash except when the
Fund is in a temporary defensive posture.
The Funds' portfolio securities are generally purchased on stock
exchanges and in over-the-counter markets in the countries in which the
principal offices of the issuers of such securities are located. The Funds may
also invest in both sponsored and unsponsored American Depositary Receipts
("ADRs") or European Depositary Receipts ("EDRs") representing securities of
foreign companies. These securities may not necessarily be denominated in the
same currency as the securities which they represent.
OTHER INVESTMENT POLICIES AND TECHNIQUES
The Funds will also utilize certain sophisticated investment techniques
described below, some of which involve substantial risks. Additional information
about some of the investment techniques described below and the related risks is
contained in the Statement of Additional Information.
16
<PAGE>
OPTIONS AND WARRANTS. Each Fund may invest up to 5% of its net assets in
options on equity or debt securities or securities indices and up to 10% of its
net assets in warrants, including options and warrants traded in
over-the-counter markets. An option on a security gives the owner the right to
acquire ("call option") or dispose of ("put option") the underlying security at
a fixed price (the "strike price") on or before a specified date in the future.
A warrant is equivalent to a call option written by the issuer of the underlying
security.
Each Fund may write covered call options on securities in an amount
equal to not more than 100% of its net assets and secured put options in an
amount equal to not more than 50% of its net assets. A call option written by a
Fund is "covered" if the Fund owns the underlying securities subject to the
option or if the Fund holds a call at the same exercise price, for the same
period and on the same securities as the call written. A put option will be
considered "secured" if a Fund segregates liquid assets having a value equal to
or greater than the exercise price of the option, or if the Fund holds a put at
the same exercise price, for the same period and on the same securities as the
put written.
FUTURES CONTRACTS. Each Fund may invest up to 5% of its net assets in
initial margin or premiums for futures contracts and options on futures
contracts, including stock index futures and financial futures. A commodity
futures contract obligates one party to deliver and the other party to purchase
a specific quantity of a commodity at a fixed price at a specified future date,
time and place. In the case of a financial future, the underlying commodity is a
financial instrument, such as a U.S. Treasury Bond.
No consideration will be paid or received by a Fund upon the purchase or
sale of a futures contract. Initially, a Fund will be required to deposit with a
broker an amount of cash or cash equivalents equal to approximately 5% of the
contract amount. Subsequent payments to and from the broker will be made daily
as the price of the index or securities underlying the futures contract
fluctuates.
An option on a commodity futures contract gives the purchaser the right,
in exchange for the payment of a premium, to assume a position as a purchaser or
a seller in a futures contract at a specified exercise price at any time prior
to the expiration date of the option. The Funds will trade in commodity futures
and options thereon for bona fide hedging purposes and otherwise in accordance
with rules of the Commodity Futures Trading Commission.
FORWARD FOREIGN EXCHANGE CONTRACTS. Since the Funds may invest in
securities denominated in currencies other than the United States dollar,
changes in foreign currency exchange rates may affect the values of portfolio
securities. The rate of exchange between the United States dollar and other
currencies is determined by forces of supply and demand in the foreign exchange
markets. These forces are affected by the international balance of payments and
other economic and financial conditions, government intervention, speculation
and other factors.
The Funds may enter into forward foreign exchange contracts for the
purchase or sale of foreign currency to "lock in" the United States dollar price
of the securities denominated in a foreign currency or the United States dollar
equivalent of interest and dividends to be paid on such securities, or to hedge
against the possibility that the currency of a foreign country in which a Fund
has investments may suffer a decline against the United States dollar, or for
speculative purposes. A forward foreign currency exchange contract obligates one
party to purchase and the other party to sell an agreed amount of a foreign
currency on an agreed date and at an agreed price.
The Funds may purchase put and call options on foreign currencies. Put
options convey the right to sell the underlying currency at a price which is
anticipated to be higher than the spot prices of the currency at the time the
option expires. Call options convey the right to buy the underlying currency at
the time the option expires. Each Fund may also write covered call options in an
amount not to exceed the value of the Fund's portfolio securities or other
assets denominated in the relevant currency and secured put options in an amount
equal to 50% of its net assets.
17
<PAGE>
ILLIQUID SECURITIES. Each Fund may invest up to 15% of its net assets in
illiquid securities, including restricted securities or private placements. An
illiquid security is a security that cannot be sold quickly in the ordinary
course of business. The absence of a trading market may adversely affect the
ability of the Funds to sell such illiquid securities promptly and at an
acceptable price, and may also make it more difficult to ascertain a market
value for such securities. Certain securities cannot be sold to the U.S. public
because of their terms or because of SEC regulation. The Investment Advisers may
determine that securities that cannot be sold to the U.S. public but that can be
sold to institutional investors (Rule 144A Securities) or on foreign markets are
liquid. The Investment Adviser will follow guidelines established by the Board
of Directors of the Company in making liquidity determinations for Rule 144A and
other securities.
BORROWING AND LENDING. Each Fund may borrow money from banks for
temporary emergency purposes in an amount not to exceed one-third of its total
assets. Borrowing by a Fund will cause it to incur interest and other expenses.
Borrowing by a Fund, also known as leverage, will also tend to exaggerate the
effect on the net asset value of the Fund's shares of any increase or decrease
in the market value of the Fund's assets.
Each Fund may lend its portfolio securities to institutions deemed
creditworthy pursuant to procedures established by the Board of Directors. No
such loan will be made which would cause the aggregate market value of all
securities lent by a Fund to exceed 15% of the value of the Fund's total assets.
ADJUSTABLE RATE INDEX NOTES. Each Fund may invest in adjustable rate
index notes (ARINs) or similar instruments. An ARIN is a form of promissory note
issued by a brokerage firm or other counterparty which provides that the amount
of principal or interest paid will vary inversely in proportion to changes in
the value of a specified security. Under such an instrument, the Fund will make
a profit if the value of the specified security decreases and will suffer a loss
if the value of the specified security increases. The effect of such an
instrument is equivalent to a short sale of the specified security, except that
the potential loss to the Fund is limited to the amount invested in the ARIN,
whereas in the case of a short sale the short seller is potentially subject to
unlimited risk of loss. The Funds could suffer losses in the event of a default
or insolvency of the brokerage firm or other counterparty issuing the ARIN.
OTHER INVESTMENT ACTIVITIES. It is likely that new investment products
will continue to develop which will combine elements of options, futures
contracts or debt securities with other types of derivative financial products,
such as swaps, caps and floors, or which will otherwise tie payments to be made
or received to the value of specific securities or to existing or new indices.
Swaps involve the exchange by two parties of their respective obligations to pay
or receive a stream of payments. For example, a Fund might exchange floating
interest payments for fixed interest payments, or a series of payments in one
currency for a series of payments in another currency. The purchase of a cap or
floor entitles the purchaser to receive payment on an agreed principal amount
from the seller if a specified index exceeds (in the case of a cap) or falls
below (in the case of a floor) a predetermined interest or exchange rate. A Fund
will not enter into swaps, caps or floors if on a net basis the aggregate
notional principal amount of such agreements exceeds the net assets of the Fund.
The Funds may invest and trade in derivative financial products to the
extent permitted by applicable regulations. Derivative products are frequently
traded on over-the-counter markets and will usually be subject to the
restriction that not more than 15% of the net assets of each Fund may be
invested in illiquid securities. The Funds will purchase or sell derivative
products for hedging purposes only, unless otherwise permitted by applicable
regulations.
DIVERSIFICATION; INVESTMENT RESTRICTIONS
The Investment Company Act of 1940 (the "Act") classifies investment
companies as either diversified or non-diversified. The Company qualifies as a
diversified company. Accordingly, each Fund's investments will be
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diversified to the extent that, with respect to 75% of its total assets, no more
than 5% of its total assets will be invested in any one issuer, and a Fund will
not acquire more than 10% of the outstanding voting securities of any one
issuer. Each Fund's investments will be selected among different industries,
such that not more than 25% of its total assets will be invested in any one
industry. The preceding limitations will not apply to securities of the United
States government, its agencies or instrumentalities.
Each Fund is subject to certain fundamental investment restrictions and
limitations which are set forth in full in the Statement of Additional
Information. These fundamental policies cannot be changed without approval of a
majority of each Fund's outstanding voting securities. All restrictions, except
the restriction relating to borrowing, shall apply only at the time an
investment is made, and a subsequent change in the value of an investment or of
a Fund's assets shall not result in a violation.
RISK CONSIDERATIONS
INVESTING IN FOREIGN SECURITIES. GAM International, GAM Europe, GAM
Pacific Basin, GAM Asian Capital and GAM Japan Capital Funds will invest
primarily in securities of foreign issuers, and GAM Global, GAM North America,
and GAMerica Capital Funds may invest a portion of their assets in securities of
foreign issuers. Investors should carefully consider the risks involved in
investments in securities of non-U.S. companies and governments. Such risks
include fluctuations in foreign exchange rates, political or economic
instability in the country of issue, and the possible imposition of exchange
controls or other laws or restrictions. Securities prices in non-U.S. markets
are generally subject to different economic, financial, political and social
factors than are the prices of securities in U.S. markets. These factors may
result in either a larger gain or a larger loss than an investment in comparable
U.S. securities.
The Funds may enter into forward foreign exchange contracts in an
attempt to hedge against adverse fluctuations in the relative rates of exchange
between different currencies. However, attempting to hedge the value of a Fund's
portfolio securities against a decline in the value of a currency will not
eliminate fluctuations in the underlying prices of the securities. There can be
no assurance that such hedging attempts will be successful.
There is likely to be less publicly available information concerning
non-U.S. issuers of securities held by the Funds than is available concerning
U.S. companies. Foreign companies are not subject to the same accounting,
auditing and financial reporting standards as are applicable to U.S. companies.
There may be less government supervision and regulation of foreign
broker-dealers, financial institutions and listed companies than exists in the
United States.
Non-U.S. securities exchanges generally have less volume than the New
York Stock Exchange and may be subject to less government supervision and
regulation than those in the United States. Securities of non-U.S. companies may
be less liquid and more volatile than securities of comparable U.S. companies.
Non-U.S. brokerage commissions and custodial fees are generally higher
than those in the United States, and the settlement period for securities
transactions may be longer, in some countries up to 30 days. Dividend and
interest income from non-U.S. securities may be subject to withholding taxes.
GAM Pacific Basin and GAM Asian Capital Funds and, to a lesser extent,
GAM Europe, GAM International and GAM Global Funds may invest a portion of their
assets in securities of issuers in developing countries or emerging markets,
which generally involve greater potential for gain or loss. In comparison to the
United States and other developed countries, developing countries may have
relatively unstable governments, economies based on only a few industries and
securities markets that trade a smaller number of securities.
GAM Europe, GAM Pacific Basin, GAM Japan Capital, GAM Asian Capital, GAM
North America and GAMerica Capital Funds will invest primarily in specific
geographic areas. An investment in one of these Funds will
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<PAGE>
tend to be affected by political, economic, fiscal, regulatory or other
developments in the relevant geographic area to a greater extent than
investments in the other Funds. For example, securities markets in Europe may be
affected by the efforts of certain European countries to adopt a single
currency, coordinate monetary and fiscal policies and form a single market and
trading block. Investments in the securities of issuers in Eastern Europe
typically would involve greater potential for gain or loss than investments in
securities of issuers in Western European countries.
The extent of economic development, political stability and market depth
of different countries in the Pacific Basin varies widely. Certain countries in
Asia and the Pacific Basin are either comparatively underdeveloped or are in the
process of becoming developed, and investments in the securities of issuers in
such countries typically would involve greater potential for gain or loss than
investments in securities of issuers in developed countries.
A large part of the Japanese economy is dependent on international
trade, so that modifications in international trade barriers and fluctuations in
trade flows may indirectly affect the value of the Fund's shares. Japan and
other countries in Asia are currently in a recession and their stock markets
have experienced substantial declines in recent years. In recent years, Japanese
and other Asian securities markets have also experienced relatively high levels
of volatility.
INVESTING IN SMALLER COMPANIES. Each Fund may invest in all types of
companies, including companies in the earlier stages of development. Investing
in smaller, newer companies generally involves greater risk and potentially
greater reward than investing in larger, more established companies. Smaller,
newer companies often have limited product lines, markets or financial
resources, and they may be dependent upon one or a few key persons for
management. The securities of such companies may be subject to more abrupt or
erratic market movements than securities of larger, more established companies.
FIXED INCOME SECURITIES. The Funds will invest in fixed income
securities which involve interest rate risk. As interest rates rise, bond values
generally fall, and as interest rates fall, bond values generally rise. The
Funds may also purchase debt securities issued by smaller or financially
distressed companies, including securities of companies which may have defaulted
on interest or principal payment obligations. Such debt securities may have very
low ratings or no ratings, may be considered speculative investments, and
involve greater risk of loss of interest and principal.
OPTIONS, FUTURES AND OTHER DERIVATIVES. Trading in options, futures and
other forms of derivatives involves substantial risks. The low margin and
premiums normally required in such trading provide a large amount of leverage. A
relatively small change in the price of a security or index underlying a
derivative can produce a disproportionately larger profit or loss, and a Fund
may gain or lose more than its initial investment. There is no assurance that a
liquid secondary market will exist for options, futures or derivatives purchased
or sold, and a Fund may be required to maintain a position until exercise or
expiration, which could result in losses. There can be no assurance that the
Funds' hedging transactions will be successful. If the Investment Advisers
predict incorrectly, the effect on the value of a Fund's investments may be less
favorable than if the Fund had not engaged in such options and futures trading.
Foreign currency forward contracts, repurchase agreements, ARINS, and
certain other types of futures, options and derivatives are entered into
directly between the Funds and banks, brokerage firms and other investors in
over-the-counter markets rather than through the facilities of any exchange. A
Fund may experience losses or delays in the event of a default or bankruptcy of
a bank, broker-dealer or other investor with which the Fund entered into such an
agreement. Some derivatives may constitute illiquid securities which cannot
readily be resold.
----------
For more complete information regarding risks which investors should
consider before making an investment in a Fund, see "Investment Objective and
Policies -- Risk Considerations" in the Statement of Additional Information.
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Shareholder Transactions and Services
- --------------------------------------------------------------------------------
Following is information relevant to purchasing, selling and exchanging
shares of the Funds, as well as a description of the shareholder services and
programs available. All transactions will be processed through the Funds'
transfer agent, Chase Global Funds Services Company (the "Transfer Agent") at
the address and telephone number set forth below under "Shareholder Inquiries".
The price or net asset value ("NAV") per share for each Fund and class,
other than GAM Japan Capital Fund, is determined at the close of regular trading
(normally 4 p.m. New York time) on each day the New York Stock Exchange is open
for business (normally Monday through Friday). GAM Japan Capital Fund's NAV is
calculated at the close of trading on the Tokyo Stock Exchange. NAV per share is
determined by dividing the value of a Fund's securities, cash and other assets
(including accrued interest), less all liabilities (including accrued expenses),
by the number of the Fund's shares outstanding. Purchase, sale and exchange
transactions in shares of the Funds will be processed based on the NAV per share
on the date the transaction request is received and accepted.
Securities traded on foreign exchanges will ordinarily be valued at the
last quoted sale price available before the close of the New York Stock Exchange
(except as described above with respect to securities held by GAM Japan Capital
Fund). If a security is traded on more than one United States or foreign
exchange, the last quoted sales price on the exchange which represents the
primary market for the security will be used. Because some of the Funds'
portfolio securities may be traded on certain weekend days and on days that are
holidays in the United States but not in other countries where trading occurs,
the net asset value of a Fund's portfolio may be significantly affected at times
when a shareholder has no ability to purchase or redeem shares of the Fund.
PURCHASING SHARES
Shares of each Fund are offered on a continuous basis. Orders received
in good form prior to 4:00 p.m. New York time (or placed with a financial
service firm before such time and transmitted by the financial service firm
before the Fund processes that day's share transactions) will be processed based
on that day's closing price or NAV, plus any applicable initial sales charge.
Purchase orders must be accompanied by a completed and signed application, and
are subject to acceptance and collection of full payment. Each Fund and GAM
Services, Inc., the Funds' distributor ("GAM Services"), reserve the right to
reject any purchase order.
The minimum initial investment in each class of the Fund is $5,000 and
subsequent investments must be at least $500, except that the minimum initial
investment for IRA accounts is $2,000 and the minimum subsequent investment is
$500. You can initiate any purchase, exchange or sale of shares through your
financial services firm or shares may be purchased by mail directly from the
Transfer Agent by forwarding the Purchase Application form attached to this
Prospectus. Complete the appropriate parts of the Purchase Application following
the instructions set forth on the form and mail it with your check payable to
"GAM Funds, Inc." All purchases by check should be in U.S. dollars. Payment for
shares may also be made by wire transfer after you have mailed in your Purchase
Application. Wire instructions are included in the Purchase Application. In
addition to the Funds, investors may also purchase directly or by exchange,
without charge, shares of The Reserve Funds -- Primary Fund, an open-end
management investment company commonly known as a money market fund (the "GAM
Money Market Account"). The GAM Money Market Account is offered through GAM
Services, but is not a series of the Company. Any contingent deferred sales
charge ("CDSC") applicable to the exchanged shares will apply to redemption of
shares of the GAM Money Market Account, and the time period used for computing
the applicable CDSC will include the time of the investment in the GAM Money
Market Account.
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Each Fund offers Class A shares. GAM International, GAM Global and GAM
Pacific Basin Funds offer Class D shares. GAM International, GAM Global, GAM
Pacific Basin, GAM Europe, GAM Japan Capital and GAM North America Funds offer
Class B and Class C shares. Each class has its own cost structure, allowing
investors to choose the one that best meets their requirements. See "Selecting a
Particular Class." Investors should consult their financial services firm to
assist them with this decision. Share purchases and other transactions are
electronically recorded (book-entry shares). The Funds do not generally issue
certificates for shares purchased.
CLASS A SHARES
Class A shares are offered at net asset value plus an initial sales
charge as set forth below, unless the purchase qualifies for a complete waiver
of the charge. Large order purchases and purchases by eligible employee
retirement plans may be made without a sales charge; however, such purchases may
be subject to a contingent deferred sales charge. Class A shares are also
subject to an ongoing fee of 0.30% annually of the average daily net assets of
each Fund represented by Class A shares pursuant to the Class A Share Plan of
Distribution adopted by the Funds. (See "Management of the Funds -- The
Distributor".)
AMOUNT
REALLOWED
SALES LOAD SALES LOAD TO DEALERS
(AS % OF (AS % OF NET (AS % OF
PURCHASE AMOUNT OFFERING PRICE) AMOUNT INVESTED) OFFERING PRICE)
Up to $100,000 5.00% 5.26% 4.0%
$100,000- $299,999 4.0% 4.17% 3.0%
$300,000-$599,999 3.0% 3.09% 2.0%
$600,000-$999,999 2.0% 2.04% 1.0%
$1,000,000 and over 0% See Large Order
Purchases Below
CLASS B SHARES
Class B shares are offered at net asset value without an initial sales
charge. The maximum purchase for Class B shares is $300,000. Class B shares are
subject to a CDSC which scales down from 5.0% to 0% if redeemed within six years
after purchase; for greater detail see the Contingent Deferred Sales Charge
Alternative section which follows. Class B shares are also subject to an ongoing
fee of 1.0% annually of the average daily net assets of each Fund represented by
Class B shares pursuant to the Class B Share Service and Distribution Plan
adopted by the Funds. (See "Management of the Funds -- The Distributor".)
CLASS C SHARES
Class C shares are offered at net asset value without an initial sales
charge. The maximum purchase for Class C shares is $1,000,000. Class C shares
are subject to a CDSC of 1.00% if redeemed within one year after purchase; for
greater detail see the Contingent Deferred Sales Charge Alternative section
which follows. Class C shares are also subject to an ongoing fee of 1.0%
annually of the average daily net assets of each Fund represented by Class C
shares pursuant to the Class C Share Service and Distribution Plan adopted by
the Funds. (See "Management of the Funds -- The Distributor".)
CLASS D SHARES
Class D shares are offered at net asset value plus an initial sales
charge which is lower than the sales charge imposed on Class A shares. Class D
shares are also subject to an ongoing fee of 0.50% annually of the
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average daily net assets of each Fund represented by Class D shares pursuant to
the Class D Share Plan of Distribution adopted by the Funds. (See "Management of
the Funds -- The Distributor").
AMOUNT
REALLOWED
SALES LOAD SALES LOAD TO DEALERS
(AS % OF (AS % OF NET (AS % OF
PURCHASE AMOUNT OFFERING PRICE) AMOUNT INVESTED) OFFERING PRICE)
Up to $100,000 3.50% 3.63% 2.5%
$100,000- $299,999 2.5% 2.56% 1.5%
$300,000-$599,999 2.0% 2.04% 1.0%
$600,000-$999,999 1.5% 1.52% 1.0%
$1,000,000 and over* 0%
*Purchases of $1 million or more should be for Class A shares. Please consult
your financial services firm.
SELECTING A PARTICULAR CLASS
In deciding which class of Fund shares to purchase, investors should
consider the following factors, as well as any other relevant facts and
circumstances:
The decision as to which class of shares is more beneficial to each
investor depends on the amount and intended length of his or her investment.
Investors who prefer an initial sales charge alternative may elect to purchase
Class A or Class D shares. Investors qualifying for significantly reduced or, in
the case of purchases of $1 million or more, no initial sales charges may find
Class A or Class D shares particularly attractive because similar sales charge
reductions are not available with respect to Class B or Class C shares.
Moreover, Class A and Class D shares are subject to lower ongoing expenses than
are Class B or Class C shares over the term of the investment. Class A shares
generally have a higher initial front-end sales charge than Class D shares, but
are subject to lower ongoing expenses. As an alternative, Class B and Class C
shares are sold without any initial sales charge, so the entire purchase price
is immediately invested in the Fund. Any investment return on these additional
investment amounts may partially or wholly offset the higher annual expenses of
these Classes. Because a Fund's future return cannot be predicted, however,
there can be no assurance that this would be the case.
Finally, each investor should consider the effect of the CDSC period and
any conversion rights of the Classes in the context of his or her own investment
time frame. For example, although Class C shares are subject to a significantly
lower CDSC upon redemptions, they do not, unlike Class B shares, convert into
Class A shares after approximately eight years, and, therefore, are subject to
an ongoing 12b-1 fee of 1.0% (rather than the 0.25% fee applicable to Class A
shares) for an indefinite period of time. Thus, Class B shares may be more
effective than Class C shares to investors with longer term investment outlooks.
Other investors, however, may elect to purchase Class C shares if, for example,
they determine that they do not wish to be subject to a front-end sales charge
and they are uncertain as to the length of time they intend to hold their
shares.
Sales personnel may receive different compensation for selling each
class of shares. Investors should understand that the purpose of a CDSC is the
same as that of the initial sales charge in that the sales charges applicable to
each class provide for the financing of the distribution of shares of that
class.
SALES CHARGE REDUCTIONS AND WAIVERS
REDUCTIONS. Certain purchases may qualify for reduced or eliminated
sales charges. Investors qualifying for a complete waiver of the sales charge
should purchase Class A shares. Please refer to the Purchase Application or
consult your financial services firm to take advantage of these purchase
options.
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<PAGE>
RIGHTS OF ACCUMULATION. You may add the value of any shares of the same
class already owned to the amount of your next investment in that class for
purposes of calculating the sales charge.
STATEMENT OF INTENTION. You may purchase shares of the same Class
subject to a sales load over a 13-month period and receive the same sales charge
as if all shares had been purchased at once.
COMBINATION PRIVILEGE. You may combine shares of the same class of more
than one Fund, and individuals may include shares purchased for themselves,
their spouse and children under the age of 21 for purposes of calculating the
sales charge.
WAIVERS OF FRONT-END SALES CHARGES. Shares may be offered without the
front-end sales charge to active and retired Fund directors and other persons
affiliated with the Fund or GAM Services or its affiliates, broker-dealers
having sales agreements with GAM Services, and spouses and minor children of the
foregoing persons or trusts or employee benefit plans for the benefit of such
persons; persons investing the proceeds of a redemption of shares of any other
investment company managed or sponsored by an affiliate of GAM Services;
accounts managed by an affiliate of GAM Services; accounts managed by an
investment advisor, or financial planner if arrangements are preapproved and
purchases are placed through an omnibus account with the Fund; clients of an
investment advisor or financial planner who place trades for their own accounts,
if such accounts are linked to a master account of such investment advisor or
financial planner on the books and records of the broker or agent; retirement,
deferred compensation plans and trusts used to fund those plans; organizations
described in Section 501 (c) of the Internal Revenue Code of 1986; charitable
remainder trusts; and certain tax qualified plans of administrators who have
entered into a services agreement with GAM Services or the Funds.
LARGE ORDERS PURCHASES AND PURCHASES BY ELIGIBLE PLANS. Purchase orders
of $1 million or more and all purchase orders by employee retirement plans with
more than 100 participants will not be subject to the front-end sales charge.
GAM Services may advance to dealers a commission from its own resources in
connection with these purchases based upon cumulative sales in each year or
portion thereof. GAM Services will pay 1% of sales up to $2 million; 0.80% on
sales of $2 million up to $3 million, 0.50% on sales of $3 million up to $5
million, and 0.25% on sales of $5 million and above. Those purchases for which
GAM Services pays a commission (and the payment of which has not been waived by
the dealer) are subject to a 1% contingent deferred sales charge ("CDSC") on any
shares sold within 18 months of purchase. In the case of eligible retirement
plans, the CDSC will apply to redemptions at the plan level only. 12b-1 fees
earned on assets representing large order purchases or purchases by eligible
plans will be retained by GAM Services for one year after the purchase is
effected in order to reimburse it for a portion of the dealer payment.
The CDSC is based on the lesser of the original purchase cost or the
current market value of the shares being sold, and is not charged on shares
acquired by reinvesting your dividends. To keep the CDSC as low as possible,
each time an investor places a request to sell shares, the Fund will first sell
any shares in your account that are not subject to a CDSC. See "Contingent
Deferred Sales Charge CDSC Waivers."
The CDSC will be waived on certain redemptions as described below under
"Contingent Deferred Sales Charge--CDSC Waivers."
SELLING SHARES
Shares may be sold on any day the New York Stock Exchange is open,
either through your financial services firm or directly to the Funds' Transfer
Agent. Financial services firms must receive requests before 4:00 p.m., New York
time, and are responsible for furnishing all necessary documentation to the
Transfer Agent.
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<PAGE>
You will receive the NAV (price) per share on the date your request is received
in proper order for processing, less any applicable CDSC.
Requests made directly to the Transfer Agent must be made in writing
unless you have elected telephone redemption privileges. (See "Telephone and
Facsimile Privileges" below.) The written request, signed by the registered
account holder(s), must be addressed and mailed to the Transfer Agent,
indicating the number of shares or dollar amount to be sold. Your signature(s)
must be guaranteed by a bank, member firm of a national stock exchange or
another eligible guarantor institution. A notary public is not acceptable. If
you hold certificates representing your shares, the certificate, endorsed for
transfer, must accompany your request. Additional documentation is required for
sales by corporations, agents, fiduciaries, surviving joint owners and
individual retirement account holders. Please contact the Transfer Agent.
When you place a request to sell shares for which the purchase money has
not yet been collected, the request will be executed in a timely fashion, but
the Fund will not release the proceeds to you until your purchase payment
clears, which may take up to ten days after the purchase. In unusual
circumstances, a Fund may temporarily suspend the processing of sell requests,
or may postpone payment of proceeds for up to three business days or longer, as
permitted by law. The value of your shares at the time of sale may be more or
less than you paid for them. The sale of shares may be a taxable event to you.
(See "Dividends and Tax Matters".)
INVOLUNTARY REDEMPTIONS. Except in the case of retirement accounts and
accounts maintained by administrators for retirement plans, if your account
value falls below $1,000 due to withdrawals other than by use of the systematic
withdrawal program described below, you may be asked to purchase more shares
within 30 days. If your account is not brought back to the minimum account size,
the Fund may close the account and mail the proceeds to the registered address
for the account. Your account will not be closed if the value has decreased due
to Fund performance or the payment of sales charges. No CDSC will be imposed on
accounts closed involuntarily.
REINSTATEMENT PRIVILEGE. If you sell shares of a Fund, you may reinvest
in your existing account (or a new account reopened under the same registration)
some or all of the proceeds in the same class of shares of any Fund within 60
days without a sales charge. If you paid a CDSC at the time of sale, you will be
credited with the portion of the CDSC paid in respect of the reinvested
proceeds.
CONTINGENT DEFERRED SALES CHARGE
CLASS A SHARES
Purchase orders of $1 million or more and all purchase orders by
employee retirement plans with more than 100 participants will not be subject to
the front-end sales charge. Those purchases for which GAM Services pays a
commission (and the payment of which has not been waived by the dealer) are
subject to a 1% contingent deferred sales charge ("CDSC") on any share sold with
18 months of purchase.
CLASS B SHARES
Class B shares are sold at net asset value without an initial sales
charge, so that the full amount of an investor's purchase payment may be
immediately invested in the Fund. A CDSC, however will be imposed on most Class
B shares redeemed within six years after purchase. The CDSC will be imposed on
any redemption of shares if after such redemption the aggregate current value of
a Class B account with the Fund falls below the aggregate amount of the
investor's purchase payments for Class B shares made during the six years
preceding the redemption. In addition, Class B shares are subject to an ongoing
12b-1 fee of 1% annually of the average daily net assets of each Fund
represented by Class B shares.
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<PAGE>
Except as noted below, Class B shares of the Fund which are held for six
years or more after purchase (calculated from the last day of the month in which
the shares were purchased) will not be subject to any CDSC upon redemption.
Shares redeemed earlier than six years after purchase may, however, be subject
to a CDSC which will be a percentage of the dollar amount of shares redeemed and
will be assessed on an amount equal to the lesser of the current market value or
the cost of the shares being redeemed. The size of the percentage will depend
upon how long the shares have been held, as set forth in the following table:
Year Since Purchase CDSC as a Percentage
Payment Made of Amount Redeemed
---------------- ------------------
First 5.0%
Second 4.0%
Third 3.0%
Fourth 3.0%
Fifth 2.0%
Sixth 1.0%
Seventh and thereafter None
CONVERSION TO CLASS A SHARES. Class B shares will convert automatically
into Class A shares, based on the relative net asset values of the shares of the
two Classes on the conversion date, which will be approximately eight (8) years
after the date of the original purchase. [In the case of Class B shares
previously exchanged (see "Exchanges"), the period of time the shares were held
in the Exchange Fund (calculated from the last day of the month in which the
Exchange Fund shares were acquired) is excluded from the holding period for
conversion. If those shares are subsequently re-exchanged for Class B shares of
a GAM Fund, the holding period resumes on the last day of the month in which
Class B shares are reacquired.]
If a shareholder has received share certificates for Class B shares,
such certificates must be delivered to the Transfer Agent at least one week
prior to the date for conversion. Class B shares evidenced by share certificates
that are not received by the Transfer Agent at least one week prior to any
conversion date will be converted into Class A shares on the next scheduled
conversion date after such certificates are received.
Effectiveness of the conversion feature is subject to the continuing
availability of a ruling of the Internal Revenue Service or an opinion of
counsel that (i) the conversion of shares does not constitute a taxable event
under the Internal Revenue Code, (ii) Class A shares received on conversion will
have a basis equal to the shareholder's basis in the converted Class B shares
immediately prior to the conversion, and (iii) Class A shares received on
conversion will have a holding period that includes the holding period of the
converted Class B shares. The conversion feature may be suspended if the ruling
or opinion is no longer available. In such event, Class B shares would continue
to be subject to Class B 12b-1 fees.
CLASS C SHARES
Class C shares are sold at net asset value without an initial sales
charge so that the full amount of an investor's purchase payment may be
immediately invested in the Fund. A CDSC of 1%, however will be imposed on most
Class C shares redeemed within one year after purchase. The CDSC will be imposed
on any redemption of shares if after such redemption the aggregate current value
of a Class C account with the Fund falls below the aggregate amount of the
investor's purchase payments for Class C shares made during the one year
preceding the redemption. In addition, Class C shares are subject to an ongoing
12b-1 fee of 1% annually of the average daily net assets of each Fund
represented by Class C shares.
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<PAGE>
Except as noted below, Class C shares of the Fund which are held for one
year or more after purchase (calculated from the last day of the month in which
the shares were purchased) will not be subject to any CDSC upon redemption.
Shares redeemed earlier than one year after purchase may, however, be subject to
a CDSC which will be a percentage of the dollar amount of shares redeemed and
will be assessed on an amount equal to the lesser of the current market value of
the cost of the shares being redeemed.
CDSC WAIVERS
A CDSC will not be imposed on (i) any amount which represents an
increase in value of shares purchased within the applicable period (18 months
for Class A, 6 years for Class B, one year for Class C) preceding the
redemption; (ii) the current net asset value of shares purchased prior to the
applicable period; or (iii) the current net asset value of shares purchased
through reinvestment of dividends or distributions and/or shares acquired in
exchange for shares of other GAM Funds. Moreover, in determining whether a CDSC
is applicable it will be assumed that amounts described in (i), (ii) and (iii)
above (in that order) are redeemed first.
In addition, the CDSC, if otherwise applicable, will be waived in the
case of:
(1) redemptions of shares held at the time a shareholder dies or becomes
disabled, only if the shares are: (a) registered either in the name of an
individual shareholder (not a trust), or in the names of such shareholder and
his or her spouse as joint tenants with right of survivorship; or (b) held in a
qualified corporate or self-employed retirement plan, Individual Retirement
Account ("IRA") or Custodial Account under Section 403(b)(7) of the Internal
Revenue Code ("403(b) Custodial Account"), provided in either case that the
redemption is requested within one year of the death or initial determination of
disability;
(2) redemptions in connection with the following retirement plan
distributions: (a) lump-sum or other distributions from a qualified corporate or
self-employed retirement plan following retirement or attainment of age 591/2;
(b) required distributions from an IRA or 403(b) Custodial Account following
attainment of age 591/2; or (c) a tax-free return of an excess contribution to
an IRA;
(3) [all redemptions of shares held for the benefit of a participant in
a Qualified Retirement Plan which offers investment companies managed by an
affiliate of GAM Services ("Eligible Plan"), provided that either: (a) the plan
continues to be an Eligible Plan after the redemption; or (b) the redemption is
in connection with the complete termination of the plan involving the
distribution of all plan assets to participants;]
(4) redemptions under the Systematic Withdrawal Plan, subject to a
maximum of 10% per year of the account balance, and further subject to a minimum
balance of $10,000;
(5) in connection with exchanges for shares of the same class of another
GAM Fund.
With reference to (1) above, for the purpose of determining disability,
the Distributor utilizes the definition of disability contained in Section
72(m)(7) of the Internal Revenue Code, which relates to the inability to engage
in gainful employment. With reference to (2) above, the term "distribution" does
not encompass direct transfer of IRA, 403(b) Custodial Accounts or retirement
plan assets to a successor custodian or trustee. All waivers will be granted
only following receipt by the Distributor of confirmation of the shareholder's
entitlement.
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EXCHANGES
Shares of one Fund may be exchanged for shares of the same class of
another Fund, or for shares of the GAM Money Market Account, generally without
paying any sales charge. Upon an exchange from the GAM Money Market Account into
a Fund, investors who purchased the GAM Money Market Account directly must pay
the initial sales charge imposed by the Fund into which they exchange. Shares
subject to a CDSC will be subject to the same CDSC after the exchange, which
will continue to age from the original purchase date. A Fund may refuse any
exchange order, and may change or cancel the exchange privilege at any time upon
60 days' notice to shareholders.
Unless an investor has elected the telephone or facsimile exchange
privilege, investors must request in writing a sale of all or a portion of their
current investment and a simultaneous purchase into a separate Fund(s), which
the investor must indicate on a new application form. An executed request to
sell and a Purchase Application must be mailed to the Transfer Agent for
processing. An exchange out of a Fund is treated as a sale and may result in a
gain or loss for tax purposes. (See "Dividends and Tax Matters".) OTHER ACCOUNT
SERVICES
DIVIDEND REINVESTMENT. Investors may opt to have their dividends
reinvested in additional shares of the same Fund and class. Unless you direct
otherwise, your distributions will be automatically reinvested. You can choose
on the Purchase Application to have a check for your dividends mailed to your
registered address. However, if your dividend checks are returned to the Fund
because they are not deliverable after two attempts, your dividends will
automatically be reinvested thereafter in additional shares of the same Fund and
class.
SYSTEMATIC WITHDRAWAL PLAN. This program allows investors to sell their
shares at regular periodic intervals and direct payment of the proceeds to
themselves or to a third party. To initiate this option, you must have at least
$10,000 worth of shares in your account. You may elect this option by providing
the information required in the appropriate section of the Purchase Application.
Withdrawals concurrent with the purchase of shares of the Funds will be
disadvantageous because of the payment of duplicative sales loads, if
applicable. For this reason, additional purchases of Fund shares are discouraged
when participating in this program.
AUTOMATIC INVESTMENT PLAN. You may make additional purchases in
incremental amounts of $500 or more through an automatic investment program.
Monthly or quarterly investments will be debited automatically at your
instruction from your account at a financial institution. To enroll in this
program, please complete the appropriate sections of the Purchase Application or
contact the Transfer Agent. You may terminate the program at any time by written
notice to the Transfer Agent. Termination will become effective within 30 days
after receipt of your request. The Fund may immediately terminate your
participation in the event that any item is unpaid by your financial
institution.
TELEPHONE AND FACSIMILE PRIVILEGES. Telephone and facsimile redemption
and exchange privileges are available and can be initiated by properly
completing the appropriate sections of the Purchase Application or contacting
the Transfer Agent. For your protection, telephone requests may be recorded in
order to verify their accuracy. In addition, the Transfer Agent has procedures
in place to verify the identity of the caller. If these procedures are not
followed, the Transfer Agent is responsible for any losses that may occur to any
account due to an unauthorized telephone call. Proceeds of telephone and
facsimile redemptions will only be mailed to your registered address or sent by
wire transfer to an account designated in advance.
SHAREHOLDER INQUIRIES. Please contact your financial representative for
further instructions and assistance with your investment, or contact the
Transfer Agent at the following address or telephone numbers:
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Chase Global Funds Services Company
73 Tremont Street
Boston, MA 02108
(800) 426-4685
(617) 557-8000 ext. 6610
Facsimile: (617) 557-8635
DIVIDENDS AND TAX MATTERS
So long as each Fund meets the requirements for being a tax-qualified
regulated investment company it pays no federal income tax on the earnings it
distributes to shareholders. Each Fund intends annually to pay a dividend
representing its entire net investment income and to distribute all its realized
net capital gains. In so doing, the Fund will avoid the imposition of any excise
taxes. Dividends, whether reinvested or taken as cash, are generally taxable.
Dividends from long-term capital gains are taxable as capital gains; dividends
from other sources are generally taxable as ordinary income.
After a Fund makes a distribution to shareholders, the value of each
outstanding share of the Fund will decrease by the amount of the distribution.
If a shareholder purchases shares immediately before the record date of the
distribution, the shareholder will pay the full price for the shares and then
receive some portion of the price back as a taxable dividend or capital gain
distribution.
Normally, any sale or exchange of shares of a Fund will be a taxable
event. Depending on the purchase price and the sale price of the shares you sell
or exchange, you may have a gain or a loss on the transaction. The Form 1099 and
Tax Notice that is mailed to you every January details your distributions and
their federal tax category. You should verify your tax liability with your tax
professional. Please consult the Statement of Additional Information for a
description of certain other tax consequences to shareholders.
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Management of the Funds
- --------------------------------------------------------------------------------
DIRECTORS AND OFFICERS
The business of the Funds is supervised by the Board of Directors, who
may exercise all powers not required by statute, the Articles of Incorporation
or the By-Laws to be exercised by the shareholders. When appropriate, the Board
of Directors will consider separately matters relating to each Fund or to any
class of shares of a Fund. The Board elects the officers of the Company and
retains various companies to carry out the Fund's operations, including the
investment advisers, custodian, administrator and transfer agent.
INVESTMENT ADVISERS
Each Fund is advised by GAM International Management Limited ("GAM"), a
corporation organized in 1984 under the laws of the United Kingdom, with its
principal offices located at 12 St. James Place, London SW1A 1NX England. Fayez
Sarofim & Co. ("Sarofim"), a Texas corporation organized in 1958 with offices at
Two Houston Center, Houston, TX 77010, serves as co-investment adviser to GAM
North America Fund. The individuals primarily responsible for the day-to-day
management of each Fund's portfolio are set forth below.
GAM GLOBAL AND GAM INTERNATIONAL FUNDS. John R. Horseman, Investment
Director, joined GAM initially as a member of the Asian team based in Hong Kong.
He commenced management of GAM International and GAM Global Funds on April 20,
1990 after moving to the London office. He is now responsible for a number of
GAM's other global and international funds, including the offshore fund, GAM
Universal US$ Inc.
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<PAGE>
GAM PACIFIC BASIN FUND. Michael S. Bunker, Investment Director, has
overall responsibility for Asian investment policy. He has over 20 years'
investment experience, primarily in Asian markets. He commenced management of
GAM Pacific Basin Fund on May 6, 1987. Mr. Bunker also manages the offshore fund
GAM Pacific Inc. He is now based in London after having lived in Hong Kong for
three years.
GAM JAPAN CAPITAL FUND. Paul S. Kirkby, Investment Director, is
responsible for investment in the Japanese market. Prior to joining GAM in 1985
as a Senior Fund Manager in Hong Kong, he was an investment analyst with New
Japan Securities Co. Ltd in Tokyo. He commenced management of GAM Japan Capital
Fund on July 1, 1994. Mr. Kirkby also manages the offshore fund GAM Japan Inc.
Mr. Kirkby is now based in London having lived in Hong Kong for seven years.
GAM ASIAN CAPITAL FUND. Adrian L. Cantwell, Investment Director, is
responsible for Asia ex Japan portfolios. Prior to joining GAM in 1990, he was a
Director of Gartmore Limited, Hong Kong, responsible for South East Asian
investment. He commenced management of GAM Asian Capital Fund on May 12, 1995.
Mr. Cantwell also manages the offshore funds GAM Asian Inc. and GAM
Singapore/Malaysia Inc. He has lived in Hong Kong since 1985.
GAM EUROPE FUND. John Bennett, Investment Director, is responsible for
European markets. Prior to joining GAM in 1993, he was a Senior Fund Manager at
Ivory & Sime, responsible for Continental European equity portfolios. He
commenced management of GAM Europe Fund on January 1, 1993. Mr. Bennett also
manages the offshore fund GAM Pan European Inc. He is based in Edinburgh.
GAM NORTH AMERICA FUND. Fayez Sarofim founded Fayez Sarofim & Co in 1958
and is the majority shareholder, President and Chairman of the Board. The firm,
which serves as co-investment adviser of GAM North America, currently manages
aggregate assets of approximately $45 billion under the supervision of Mr.
Sarofim. Mr. Sarofim is also a director of Allegheny Teledyne, Inc., Argonaut
Group, Unitrin, Inc., Imperial Holly Corp. and EXOR Group. He commenced
management of GAM North America Fund on June 29, 1990. Mr. Sarofim also manages
the offshore fund GAM US Inc.
GAMERICA CAPITAL FUND. Gordon Grender, Director, has been associated
with the GAM group since 1983. He has been actively involved in fund management
in North American stock markets since 1974. He commenced management of GAMerica
Capital Fund on May 12, 1995. Mr. Grender also manages GAMerica Inc., an
offshore fund with similar investment objectives.
GAM is an indirect subsidiary of Global Asset Management Ltd., which
itself is ultimately controlled, as to approximately 70%, by Lorelock, S.A.,
which itself is controlled by a discretionary trust of which Mr. de Botton,
President and Director of the Company, may be a potential beneficiary and, as to
approximately 30%, by St. James's Place Capital plc (a financial services
company organized under the laws of and based in the United Kingdom). Global
Asset Management Ltd., directly or indirectly through its subsidiaries, manages
domestic and foreign mutual funds and managed accounts with aggregate assets of
approximately $11 billion.
Subject to the direction and general supervision of the Board of
Directors, GAM furnishes the Funds with investment research and advice and makes
recommendations with respect to the Funds' purchases and sales of portfolio
securities and brokerage allocation, and both GAM and Sarofim provide such
services with respect to GAM North America Fund. As compensation for such
services, each Fund except GAM North America Fund pays GAM the equivalent to
1.0% per annum of the Fund's average daily net assets. GAM North America Fund
pays a fee equal to 0.50% of its average daily net assets to each of GAM and
Sarofim, representing an aggregate fee equal to 1.0% of its average daily net
assets.
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The Funds' expense ratios may be higher than those of most registered
investment companies since the cost of maintaining custody of foreign securities
is higher than those for most domestic funds and the rate of the advisory fee
paid by each Fund exceeds that of most registered investment companies. The
Funds pay for all expenses of their operations.
DISTRIBUTOR AND SALES AND SERVICE COMPENSATION
GAM Services Inc., an affiliate of GAM with its principal offices
located at 135 East 57th Street, New York, New York 10022, serves as distributor
and principal underwriter of the Funds' shares. As such, GAM Services
compensates financial services firms which sell shares of the Funds pursuant to
agreements with GAM Services. Compensation payments originate from sales charges
paid by shareholders at the time of purchase and from 12b-1 fees paid out of
Fund assets.
Initial sales charges are deducted from payment for shares at the time
of investment and reallowed to financial services firms as set forth in the
table under "Purchase of Shares." These firms typically pass on a portion of
this selling compensation to their financial representatives who sell shares of
the Funds and provide personal account services to Fund shareholders.
12b-1 fees vary according to the 12b-1 Plan adopted by each Fund for
each class of shares. The Funds pay 12b-1 fees equal to 0.30% annually of the
average daily net assets represented by Class A shares. Of this amount, GAM
Services retains 0.05% annually and a service fee of 0.25% is reallowed to
financial services firms. Funds offering Class B shares pay 1.00% annually of
the average daily net assets represented by Class B shares. The Funds offering
Class C shares pay 1.00% annually of the average daily net assets represented by
Class C shares. Funds offering Class D shares pay 12b-1 fees equal to 0.50%
annually of those Funds' net assets represented by Class D shares. GAM Services
reallows the entire Class D share 12b-1 fee to financial services firms. In the
case of Class A, Class B, Class C and Class D share accounts which are not
assigned to a financial services firm, GAM Services retains the entire fee.
Distribution fees may be used to pay sales and service compensation to financial
services firms and to defray other distribution related expenses enumerated in
the 12b-1 Plans. Should the fees collected under the Plans exceed the expenses
of GAM Services in any year, GAM Services would realize a profit.
GAM Services, as distributor for the GAM Money Market Account, collects
a fee paid in part by the GAM Money Market Account pursuant to distribution and
shareholder service arrangements offered by The Reserve Funds and their
principal underwriter.
GAM Services or the Funds may also contract with banks, trust companies,
broker-dealers or other financial organizations to act as shareholder servicing
agents to provide administrative services for the Funds, such as processing
purchase and redemption transactions, transmitting and receiving funds for the
purchase and sale of shares in the Funds, answering routine inquiries regarding
the Funds, furnishing monthly and year-end statements and confirmations of
purchases and sales of shares, transmitting periodic reports, updated
prospectuses, proxy statements and other communications to shareholders, and
providing other services as agreed from time to time. For these services, each
Fund pays fees to shareholder servicing agents which may vary depending upon the
services provided, but do not exceed an annual rate of 0.25% of the daily net
asset value of the shares of a Fund owned by shareholders with whom the
shareholder servicing agent has a servicing relationship.
CUSTODIAN AND ADMINISTRATOR
Brown Brothers Harriman & Co., 40 Water Street, Boston, Massachusetts
02109, serves as custodian of the Funds' securities and cash and as their
administrator. Brown Brothers employs subcustodians for the purpose of providing
custodial services for the Funds' foreign assets held outside the United States.
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TRANSFER AGENT; SHAREHOLDER SERVICING AGENTS
Chase Global Fund Services Company, P.O. Box 2798, Boston, Massachusetts
02208 (the "Transfer Agent") serves as shareholder service agent,
dividend-disbursing agent, transfer agent and registrar for the Funds. Pursuant
to an agreement with GAM Services, the Transfer Agent also provides information
to representatives of financial services companies. As referenced above, the
Funds and GAM Services also engage and compensate other entities for serving as
shareholder servicing and subaccounting agents for the benefit of discrete
groups of Fund shareholders.
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Description of Shares
- --------------------------------------------------------------------------------
GAM Funds, Inc., a Maryland corporation, was organized on May 7, 1984.
The Company has eight series of common stock outstanding, each of which may be
divided into four classes of shares, Class A shares, Class B, Class C and Class
D shares. The four classes of shares of a series represent interests in the same
portfolio of investments, have the same rights, and are generally identical in
all respects, except that each class bears its separate distribution and certain
class expenses and has exclusive voting rights with respect to any matter on
which a separate vote of any class is required by the Act or Maryland law. The
net income attributable to each class and dividends payable on the shares of
each class will be reduced by the amount of distribution fees and other expenses
of each class. Class D shares bear higher 12b-1 fees than Class A shares, which
will cause the Class D shares to pay lower dividends than the Class A shares.
Class B and Class C shares pay higher 12b-1 fees than Class A and Class D
shares, which will cause the Class B and Class C shares to pay lower dividends
than the Class A and Class D shares. The Directors, in the exercise of their
fiduciary duties under the Act and Maryland law, will seek to ensure that no
conflicts arise among the classes of shares of a Fund.
Each share outstanding is entitled to share equally in dividends and
other distributions and in the net assets of the respective series Fund on
liquidation. Shares are fully paid and nonassessable when issued, freely
transferable, have no pre-emptive, subscription or conversion rights and are
redeemable and subject to redemption under certain conditions described above.
Each share outstanding entitles the holder to one vote. If a Fund is
separately affected by a matter requiring a vote, the shareholders of each such
Fund shall vote separately. The Company is not required to hold annual meetings
of shareholders, although special meetings will be held for purposes such as
electing or removing directors, changing fundamental policies, or approving an
investment advisory agreement. Shareholders will be assisted in communicating
with other shareholders in connection with removing a director as if Section 16
(c) of the Act were applicable.
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Additional Information
- --------------------------------------------------------------------------------
This Prospectus does not contain all the information included in the
Registration Statement filed with the SEC with respect to the securities offered
hereby. The Registration Statement, including the exhibits filed therewith, may
be examined at the office of the SEC in Washington, D.C.
Statements contained in this Prospectus as to the contents of any
contract or other document referred to are not necessarily complete and, in each
instance, reference should be made to the copy of such contract or other
document filed as an exhibit to the Registration Statement of which this
Prospectus forms a part, each such statement being qualified in all respects by
such reference.
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<PAGE>
GLOBAL ASSET MANAGEMENT(R)
GAM FUNDS, INC.
PROSPECTUS
AND
APPLICATION
APRIL 30, 1998
No dealer, salesman, or any other person has been authorized to give any
information or to make any representations, other than those contained in this
Prospectus, in connection with the offer contained in this Prospectus, and, if
given or made, such other information or representations must not be relied upon
as having been authorized by the Company. This Prospectus does not constitute an
offer by the Company to sell or a solicitation of any offer to buy any of the
securities offered hereby in any jurisdiction to any person to whom it is
unlawful to make such offer or solicitation in such jurisdiction.
<PAGE>
GAM FUNDS, INC.
135 East 57th Street
New York, NY 10022
Tel: (212) 407-4600/Fax: (212) 407-4684
STATEMENT OF ADDITIONAL INFORMATION
April 30, 1998
This Statement of Additional Information pertains to the funds listed below,
each of which is a separate series of common stock GAM Funds, Inc. (the
"Company"), a diversified open-end management investment company. Each series of
the Company represents a separate portfolio of securities (each a "Fund" and
collectively the "Funds"). The investment objective of each Fund is to seek long
term capital appreciation through investment primarily in equity securities.
Each Fund seeks to achieve its objective by investing primarily within a
particular geographic region in accordance with its own investment policy. There
is no assurance that the Funds will achieve their objective.
The Funds are managed by GAM International Management Limited ("GAM"). Fayez
Sarofim & Co. ("Sarofim") serves as co-investment adviser to the GAM North
America Fund. (GAM and Sarofim are collectively referred to as the "Investment
Advisers".) GAM Services, Inc. ("GAM Services"), an affiliate of GAM, serves as
the principal underwriter for the Funds' securities.
GAM Global Fund invests primarily in the United States, Europe, the
Pacific Basin, and Canada.
GAM International Fund invests primarily in Europe, the Pacific
Basin and Canada.
GAM Pacific Basin Fund invests primarily in the Pacific Basin,
including Japan, Hong Kong, Korea, Taiwan, Singapore, Malaysia,
Thailand, Indonesia and Australia.
GAM Japan Capital Fund invests primarily in Japan.
GAM Asian Capital Fund invests primarily in Asia excluding Japan.
GAM Europe Fund invests primarily in Europe.
GAM North America Fund invests primarily in the United States and
Canada.
GAMerica Capital Fund investing primarily in the United States.
This Statement of Additional Information, which should be kept for future
reference, is not a prospectus. It should be read in conjunction with the
Prospectus of the Funds, dated April 30, 1998 which can be obtained without cost
upon request at the address indicated above.
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TABLE OF CONTENTS
Page
INVESTMENT OBJECTIVE AND POLICIES 3
Rating of Securities 3
United States Government Obligations 3
Repurchase Agreements 4
Options 4
Stock Index Futures and Options 5
Interest Rate Futures and Options 6
Foreign Currency Transactions 7
Lending Portfolio Securities 9
Warrants 9
Borrowing 9
Restricted Securities 10
Future Developments 10
Investment Restrictions 10
Risk Considerations 12
Portfolio Turnover 13
PERFORMANCE INFORMATION 13
NET ASSET VALUE, DIVIDENDS AND TAXES 15
Net Asset Value 15
Suspension of the Determination of Net Asset Value 15
Tax Status 15
MANAGEMENT OF THE COMPANY 17
Compensation of Directors and Executive Officers 18
Principal Holders of Securities 20
INVESTMENT ADVISORY AND OTHER SERVICES 22
Investment Advisory Contracts 22
Advisory Fees 23
Investment Advisers 24
Principal Underwriter and Plans of Distribution 25
Custodian and Administrator 29
Transfer Agent 29
Legal Counsel 30
Independent Accountants 30
Reports to Shareholders 30
BROKERAGE ALLOCATION 30
FINANCIAL STATEMENTS 31
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INVESTMENT OBJECTIVE AND POLICIES
The investment objective and policies of each Fund are described in the
Prospectus under the heading "Investment Objective and Policies and Risk
Considerations." Set forth below is additional information with respect to the
investment objective and policies of each Fund.
Rating of Securities. Each Fund may invest a substantial portion of its assets
in debt securities issued by companies or governments and their agencies and
instrumentalities if it determines that the long-term capital appreciation of
such debt securities may equal or exceed the return on equity securities. The
debt securities (bonds and notes) in which the Funds may invest will be rated C
or better by Moody's Investors Services, Inc. ("Moody's") or D or better by
Standard & Poor's Corporation ("S&P"), which are the lowest ratings, or, if
unrated, be comparable in quality as determined pursuant to guidelines
established by the Company's Board of Directors, since debt securities of
foreign companies and foreign governments are not generally rated by Moody's or
S&P. Each Fund may, for temporary defensive purposes, invest in debt securities
(with remaining maturities of five years or less) issued by companies and
governments and their agencies and instrumentalities and in money market
instruments denominated in currency of the United States or foreign nations. The
money market instruments include commercial paper which, when purchased, is
rated Prime-1 or better by Moody's or A-1 or better by S&P or, if not rated, is
issued by a company which at the date of investment has an outstanding debt
issue rated Aa or better by Moody's or AA or better by S&P or is of equivalent
investment quality as determined by the Company pursuant to guidelines
established and maintained in good faith by the Board of Directors.
None of the Funds will commit more than 5% of its assets, determined at the time
of investment, to investments in debt securities which are rated lower than
"investment grade" by a rating service. Debt securities rated lower than
"investment grade," also known as "junk bonds," are those debt securities not
rated in one of the four highest categories by a rating service (e.g., bonds
rated lower than BBB by S&P or lower than Baa by Moody's). Junk bonds, and debt
securities rated in the lowest "investment grade," have speculative
characteristics, and changes in economic circumstances or other circumstances
are more likely to lead to a weakened capacity on the part of issuers of such
lower rated debt securities to make principal and interest payments than issuers
of higher rated investment grade bonds. Developments such as higher interest
rates may lead to a higher incidence of junk bond defaults, and the market in
junk bonds may be more volatile and illiquid than that in investment grade
bonds.
United States Government Obligations. The Funds may invest in securities of the
United States government, its agencies and instrumentalities. United States
government securities include United States Treasury obligations, which include
United States Treasury bills, United States Treasury notes and United States
Treasury bonds; and obligations issued or guaranteed by United States government
agencies and instrumentalities. Agencies and instrumentalities include the
Federal Land Banks, Farmers Home Administration, Central Bank for Cooperatives,
Federal Intermediate Credit
3
<PAGE>
Banks, Federal Home Loan Bank, Student Loan Marketing Association, Federal
National Mortgage Association and Government National Mortgage Association.
Repurchase Agreements. Each Fund may, for temporary defensive purposes, invest
in repurchase agreements. In such a transaction, at the same time a Fund
purchases a security, it agrees to resell it to the seller and is obligated to
redeliver the security to the seller at a fixed price and time. This establishes
a yield during the Fund's holding period, since the resale price is in excess of
the purchase price and reflects an agreed-upon market rate. Such transactions
afford an opportunity for a Fund to invest temporarily available cash.
Repurchase agreements may be considered loans to the seller collateralized by
the underlying securities. The risk to a Fund is limited to the ability of the
seller to pay the agreed-upon sum on the delivery date; in the event of a
default the repurchase agreement provides that the Fund is entitled to sell the
underlying collateral. If the value of the collateral declines after the
agreement is entered into, however, and if the seller defaults when the value of
the underlying collateral is less than the repurchase price, a Fund could incur
a loss of both principal and interest. The collateral is marked-to-market daily
and the Investment Advisers monitor the value of the collateral in an effort to
determine that the value of the collateral always equals or exceeds the
agreed-upon sum to be paid to a Fund. If the seller were to be subject to a
United States bankruptcy proceeding, the ability of a Fund to liquidate the
collateral could be delayed or impaired because of certain provisions in the
bankruptcy law. Each Fund may only enter into repurchase agreements with
domestic or foreign securities dealers, banks and other financial institutions
deemed to be creditworthy under guidelines approved by the Board of Directors.
Options. The principal reason for writing covered call options is to realize,
through the receipt of premiums, a greater return than would be realized on a
Fund's portfolio securities alone. In return for a premium, the writer of a
covered call option forfeits the right to any appreciation in the value of the
underlying security above the strike price for the life of the option (or until
a closing purchase transaction can be effected). Nevertheless, the call writer
retains the risk of a decline in the price of the underlying security.
Similarly, the principal reason for writing secured put options is to realize
income in the form of premiums. The writer of a secured put option accepts the
risk of a decline in the price of the underlying security.
Although each Fund generally will purchase or write only those options for which
it believes there is an active secondary market so as to facilitate closing
transactions, there is no assurance that sufficient trading interest to create a
liquid secondary market on a securities exchange will exist for any particular
option or at any particular time, and for some options no such secondary market
may exist. A liquid secondary market in an option may cease to exist for a
variety of reasons. In such event, it might not be possible to effect closing
transactions in particular options. If, as a covered call option writer, a Fund
is unable to effect a closing purchase transaction in a secondary market, it
will not be able to sell the underlying security until the option expires or it
delivers the underlying security upon exercise.
The success of each Fund's options trading activities will depend on the ability
of the Investment Advisers to predict correctly future changes in the prices of
securities. Purchase or sale of options to hedge each Fund's existing securities
positions is also subject to the risk that the value of the option purchased or
sold may not move in perfect correlation with the price of the underlying
security.
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<PAGE>
It is a condition to the favorable tax treatment afforded to a regulated
investment company, such as the Funds, that each Fund derive less than 30% of
its gross income from the sale or disposition of securities (including certain
options and futures contracts) held for less than three months. This requirement
may limit the extent to which each Fund may engage in trading in options and
futures (discussed below), and options and futures trading may increase the risk
that a Fund may not satisfy this requirement and that it may therefore become
liable for taxes on its income and gains. The greater leverage in options and
futures trading may also tend to increase the daily fluctuations in the value of
a Fund's shares.
Stock Index Futures and Options. Each Fund may purchase and sell stock index
futures contracts, and purchase, sell and write put and call options on stock
index futures contracts, for the purpose of hedging its portfolio. A stock index
fluctuates with changes in the market value of the stocks included in the index.
An option on a securities index gives the holder the right to receive, upon
exercise of the option, an amount of cash if the closing level of the securities
index upon which the option is based is greater than, in the case of a call
option, or less than, in the case of a put option, the strike price of the
option. Some stock index options are based on a broad market index, such as the
NYSE Composite Index, or a narrower market index, such as the Standard & Poor's
100. In the case of a stock index future, the seller of the futures contract is
obligated to deliver, and the purchaser obligated to take, an amount of cash
equal to a specific dollar amount multiplied by the difference between the value
of a specific stock index at the close of the last trading day of the contract
and the price at which the agreement is made. No physical delivery of the
underlying stocks in the index is made. If the assets of a Fund are
substantially invested in equity securities, the Fund might sell a futures
contract based on a stock index which is expected to reflect changes in prices
of stocks in the Fund's portfolio in order to hedge against a possible general
decline in market prices. A Fund may similarly purchase a stock index futures
contract to hedge against a possible increase in the price of stocks before the
Fund is able to invest cash or cash equivalents in stock in an orderly fashion.
The effectiveness of trading in stock index futures and options as a hedging
technique will depend upon the extent to which price movements in a Fund's
portfolio correlate with price movements of the stock index selected. Because
the value of an index future or option depends upon movements in the level of
the index rather than the price of a particular stock, whether a Fund will
realize a gain or loss from the purchase, sale or writing of a stock index
future or option depends upon movements in the level of stock prices in the
stock market generally, or in the case of certain indexes, in an industry or
market segment, rather than movements in the price of a particular stock.
In addition to the possibility that there may be an imperfect correlation, or no
correlation at all, between movements in a stock index and the portion of the
portfolio being hedged, the price of stock index futures may not correlate
perfectly with the movement in the stock index due to certain market
distortions. First, all participants in the futures market are subject to margin
deposit and maintenance requirements. Rather than meeting additional margin
deposit requirements, investors may close futures contracts through offsetting
transactions which would distort the normal relationship between the index and
futures markets. Secondly, from the point of view of speculators, the deposit
requirements in the futures market are less onerous than margin requirements in
the securities market. Therefore, increased participation by speculators in the
futures market also may cause temporary price distortions. Due to the
possibility of price distortions in the futures market and because of the
imperfect correlation between movements in the stock index and movements in the
price of stock index futures, a correct forecast of general market trends by the
Investment Advisers still may not result in a successful hedging transaction.
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Successful use of stock index futures by the Funds also is subject to the
ability of the Investment Adviser to predict correctly movements in the
direction of the market. For example, if a Fund has hedged against the
possibility of a decline in the market adversely affecting stocks held in its
portfolio and stock prices increase instead, the Fund will lose part or all of
the benefit of the increased value of its stocks which it has hedged because it
will have offsetting losses in its futures positions.
Each Fund may purchase and sell commodity futures contracts, and purchase, sell
or write options on futures contracts, for bona fide hedging purposes or
otherwise in accordance with applicable rules of the Commodity Futures Trading
Commission (the "CFTC"). CFTC rules permit an entity such as a Fund to acquire
commodity futures and options as part of its portfolio management strategy,
provided that the sum of the amount of initial margin deposits and premiums paid
for unexpired commodity futures contracts and options would not exceed 5% of the
fair market value of the assets of the Fund, after taking into account
unrealized profits and unrealized losses on such contracts it has entered into.
In the case of an option that is in-the-money at the time of purchase, the
in-the-money amount may be excluded in calculating the 5%.
When a Fund enters into a futures contract or writes an option on a futures
contract, it will instruct its custodian to segregate cash or liquid securities
having a market value which, when added to the margin deposited with the broker
or futures commission merchant, will at all times equal the purchase price of a
long position in a futures contract, the strike price of a put option written by
the Fund, or the market value (marked-to-market daily) of the commodity
underlying a short position in a futures contract or a call option written by
the Fund, or the Fund will otherwise cover the transaction.
Interest Rate Futures and Options. Each Fund may hedge against the possibility
of an increase or decrease in interest rates adversely affecting the value of
securities held in its portfolio by purchasing or selling a futures contract on
a specific debt security whose price is expected to reflect changes in interest
rates. However, if a Fund anticipates an increase in interest rates and rates
decrease instead, the Fund will lose part or all of the benefit of the increased
value of the securities which it has hedged because it will have offsetting
losses in its futures position.
A Fund may purchase call options on interest rate futures contracts to hedge
against a decline in interest rates and may purchase put options on interest
rate futures contracts to hedge its portfolio securities against the risk of
rising interest rates. A Fund will sell options on interest rate futures
contracts as part of closing purchase transactions to terminate its options
positions. No assurance can be given that such closing transactions can be
effected or that there will be a correlation between price movements in the
options on interest rate futures and price movements in the portfolio securities
of the Fund which are the subject of the hedge. In addition, a Fund's purchase
of such options will be based upon predictions as to anticipated interest rate
trends, which could prove to be inaccurate. The potential loss related to the
purchase of an option on an interest rate futures contracts is limited to the
premium paid for the option.
Although each Fund intends to purchase or sell commodity futures contracts only
if there is an active market for each such contract, no assurance can be given
that a liquid market will exist for the contracts at any particular time. Many
futures exchanges and boards of trade limit the amount of fluctuation permitted
in futures contract prices during a single trading day. Once the daily limit has
been reached in a particular contract, no trades may be made that day at a price
beyond that
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limit. Futures contract prices could move to the daily limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of futures positions and subjecting some futures traders to
substantial losses. In such event and in the event of adverse price movements, a
Fund would be required to make daily cash payments of variation margin. In such
circumstances, an increase in the value of the portion of the portfolio being
hedged, if any, may offset partially or completely losses on the futures
contract. However, no assurance can be given that the price of the securities
being hedged will correlate with the price movements in a futures contract and
thus provide an offset to losses on the futures contract.
Foreign Currency Transactions. Since investments in foreign securities will
usually involve currencies of foreign countries, and since each Fund may
temporarily hold funds in foreign or domestic bank deposits in foreign
currencies during the completion of investment programs, the value of the assets
of each Fund as measured in United States dollars may be affected favorably or
unfavorably by changes in foreign currency exchange rates and exchange control
regulations, and the Funds may incur costs in connection with conversions
between various currencies. The Funds may enter into foreign currency exchange
transactions either on a spot (i.e., cash) basis at the spot rate prevailing in
the foreign currency exchange market, or through entering into forward contracts
to purchase or sell foreign currencies. A forward foreign exchange contract
involves an obligation to purchase or sell a specific currency at a future date,
which may be any fixed number of days from the date of the contract agreed upon
by the parties, at a price set at the time of the contract. These contracts are
traded in the interbank market conducted directly between currency traders
(usually large commercial banks) and their customers. A forward contract
generally has no deposit requirement and is consummated without payment of any
commission.
Each Fund may enter into forward foreign exchange contracts for speculative
purposes and under the following circumstances: When a Fund enters into a
contract for the purchase or sale of a security denominated in a foreign
currency, or when a Fund anticipates the receipt in a foreign currency of
dividends or interest payments on such a security which it purchases or already
holds, it may desire to "lock-in" the United States dollar price of the security
or the United States dollar equivalent of such dividend or interest payment, as
the case may be. By entering into a forward contract for the purchase or sale,
for a fixed amount of dollars, of the amount of foreign currency involved in the
underlying security transactions, the Fund will be able to protect itself
against a possible loss resulting from an adverse change in the relationship
between the United States dollar and the subject foreign currency during the
period between the date the security is purchased or sold, or on which the
dividend or interest payment is declared, and the date on which payment is made
or received.
If it is believed that the currency of a particular foreign country may suffer a
substantial decline against the United States dollar or another currency, a Fund
may enter into a forward contract to sell, for a fixed amount of dollars, the
amount of foreign currency approximating the value of some or all of the Fund's
portfolio securities denominated in such foreign currency. The precise matching
of the forward contract amounts and the value of the securities involved will
not generally be possible since the future value of such securities in foreign
currencies will change as a consequence of market movements in the value of
those securities between the date the forward contract is entered into and the
date it matures.
The projection of short-term currency market movements is extremely difficult,
and the successful execution of a short-term hedging strategy is highly
uncertain. Each Fund will place cash or liquid securities in a separate custody
account of the Fund with the Company's custodian in an amount
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<PAGE>
equal to the value of the Fund's total assets committed to the consummation of
the hedge contracts or otherwise cover such transactions. The securities placed
in the separate account will be marked-to-market daily. If the value of the
securities placed in the separate account declines, additional cash or liquid
securities will be placed in the account on a daily basis so that the value of
the account will equal the amount of the Fund's uncovered commitments with
respect to such contracts.
The Funds generally will not enter into a forward contract with a term of
greater than one year. At the maturity of a forward contract, a Fund may either
sell the portfolio security and make delivery of the foreign currency, or it may
retain the security and terminate its contractual obligation to deliver the
foreign currency by purchasing an "offsetting" contract with the same currency
trader obligating it to purchase, on the same maturity date, the same amount of
the foreign currency. A Fund may also purchase an "offsetting" contract prior to
the maturity of the underlying contract. There is no assurance that such an
"offsetting" contract will always be available to a Fund.
It is impossible to forecast with absolute precision what the market value of
portfolio securities will be at the expiration of a related forward contract.
Accordingly, it may be necessary for a Fund to purchase additional foreign
currency on the spot market (and bear the expense of such purchase) if the
market value of a security being sold is less than the amount of foreign
currency the Fund is obligated to deliver. Conversely, a Fund may sell on the
spot market some of the foreign currency received upon the sale of the portfolio
security if its market value exceeds the amount of foreign currency the Fund is
obligated to deliver.
If a Fund retains the portfolio security and engages in an offsetting
transaction, the Fund will incur a gain or a loss to the extent that there has
been movement in forward contract prices. If a Fund engages in an offsetting
transaction, it may subsequently enter into a new forward contract to sell the
foreign currency. Should forward prices decline during the period between a
Fund's entering into a forward contract for the sale of a foreign currency and
the date it enters into an offsetting contract for the purchase of the foreign
currency, the Fund will realize a gain to the extent the price of the currency
it has agreed to purchase is less than the price of the currency it has agreed
to sell. Should forward prices increase, the Fund will suffer a loss to the
extent the price of the currency it has agreed to purchase exceeds the price of
the currency it has agreed to sell.
A Fund is not required to enter into hedging transactions with regard to its
foreign currency-denominated securities and will not do so unless deemed
appropriate by the Investment Advisers. Hedging the value of a Fund's portfolio
securities against a decline in the value of a currency does not eliminate
fluctuations in the underlying prices of the securities. Although such contracts
tend to minimize the risk of loss due to a decline in the value of the hedged
currency, at the same time, they tend to limit any potential gain which might
result should the value of such currency increase.
The Funds may purchase or sell options to buy or sell foreign currencies and
options on foreign currency futures, or write such options, as a substitute for
entering into forward foreign exchange contracts in the circumstances described
above. For example, in order to hedge against the decline in value of portfolio
securities denominated in a specific foreign currency, a Fund may purchase an
option to sell, for a specified amount of dollars, the amount of foreign
currency represented by such portfolio securities. In such case, the Fund will
pay a "premium" to acquire the option, as well as the agreed exercise price if
it exercises the option.
Although each Fund values its assets daily in terms of United States dollars,
the Funds do not intend to convert their foreign currency holdings into United
States dollars on any regular basis. A
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Fund may so convert from time to time, and thereby incur certain currency
conversion charges. Although foreign exchange dealers do not generally charge a
fee for conversion, they do realize a profit based on the difference (the
"spread") between the prices at which they are buying and selling various
currencies. Thus, a dealer may offer to sell a foreign currency to a Fund at one
rate, while offering a lesser rate of exchange should the Fund desire to resell
that currency to the dealer.
Lending Portfolio Securities. Each Fund may lend its portfolio securities to
brokers, dealers and financial institutions considered creditworthy when secured
by collateral maintained on a daily marked-to-market basis in an amount equal to
at least 100% of the market value, determined daily, of the loaned securities. A
Fund may at any time call the loan and obtain the return of the securities
loaned. No such loan will be made which would cause the aggregate market value
of all securities lent by a Fund to exceed 15% of the value of the Fund's total
assets. The Fund will continue to receive the income on loaned securities and
will, at the same time, earn interest on the loan collateral. Any cash
collateral received under these loans will be invested in short-term money
market instruments.
Warrants. Each Fund may purchase warrants. The holder of a warrant has the right
to purchase a given number of shares of a particular issuer at a specified price
until expiration of the warrant. Such investments can provide a greater
potential for profit or loss than an equivalent investment in the underlying
security. Each Fund may invest up to 10% of its net assets, valued at the lower
of cost or market value, in warrants (other than those that have been acquired
in units or attached to other securities), including warrants not listed on
American or foreign stock exchanges. Prices of warrants do not move in tandem
with the prices of the underlying securities, and are speculative investments.
They pay no dividends and confer no rights other than a purchase option. If a
warrant is not exercised by the date of its expiration, a Fund will lose its
entire investment in such warrant.
Borrowing. Each Fund may borrow from banks for temporary emergency purposes.
Each Fund will maintain continuous asset coverage (that is, total assets
including borrowings, less liabilities exclusive of borrowings) of 300% of the
amount borrowed. If the 300% asset coverage should decline as a result of market
fluctuations or other reasons, a Fund may be required to sell some of its
portfolio holdings within three days to reduce the debt and restore the 300%
asset coverage, even though it may be disadvantageous from an investment
standpoint to sell portfolio holdings at the time.
Borrowing money, also known as leveraging, will cause a Fund to incur interest
charges, and may increase the effect of fluctuations in the value of the
investments of the Fund on the net asset value of its shares. A Fund will not
purchase additional securities for investment while there are bank borrowings
outstanding representing more than 5% of the total assets of the Fund.
Restricted Securities. The Funds may purchase securities that are not registered
for sale to the general public in the United States, but which can be resold to
institutional investors in the United States, including securities offered
pursuant to Rule 144A adopted by the United States Securities and Exchange
Commission ("SEC"). Provided that a dealer or institutional trading market in
such securities exists, either within or outside the United States, these
restricted securities will not be treated as illiquid securities for purposes of
the Funds' investment restrictions. The Board of Directors will establish
standards for determining whether or not 144A securities are liquid based on
the level of trading activity, availability of reliable price information and
other relevant considerations. The Funds may also purchase privately placed
restricted securities for which no
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<PAGE>
institutional market exists. The absence of a trading market may adversely
affect the ability of the Funds to sell such illiquid securities promptly and at
an acceptable price, and may also make it more difficult to ascertain a market
value for illiquid securities held by the Funds.
Future Developments. The Funds may take advantage of opportunities in the area
of options and futures contracts and other derivative financial instruments
which are developed in the future, to the extent such opportunities are both
consistent with each Fund's investment objective and permitted by applicable
regulations. The Funds' Prospectus and Statement of Additional Information will
be amended or supplemented, if appropriate in connection with any such
practices.
Fundamental Investment Restrictions. Each Fund has adopted certain investment
restrictions which cannot be changed without approval by holders of a majority
of its outstanding voting shares. As defined in the Investment Company Act of
1940, as amended (the "Act"), this means the lesser of (a) 67% or more of the
shares of the Fund at a meeting where more than 50% of the outstanding shares
are present in person or by proxy or (b) more than 50% of the outstanding shares
of the Fund.
In accordance with these restrictions, each Fund may not:
1. With respect to 75% of its total assets, invest more than 5% of its total
assets in any one issuer (other than the United States government, its agencies
and instrumentalities) or purchase more than 10% of the voting securities, or
more than 10% of any class of securities, of any one issuer. (For this purpose
all outstanding debt securities of an issuer are considered as one class, and
all preferred stocks of an issuer are considered as one class.)
2. Invest for the purpose of exercising control or management of another
company.
3. Invest in real estate (including real estate limited partnerships), although
a Fund may invest in marketable securities which are secured by real estate and
securities of companies which invest or deal in real estate.
4. Concentrate more than 25% of the value of its total assets in any one
industry (including securities of non-United States governments).
5. Make loans, except that this restriction shall not prohibit (1) the purchase
of publicly distributed debt securities in accordance with a Fund's investment
objectives and policies, (2) the lending of portfolio securities, and (3)
entering into repurchase agreements.
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6. Borrow money, except from banks for temporary emergency purposes and, in no
event, in excess of 33 1/3% of its total assets at value or cost, whichever is
less; or pledge or mortgage its assets or transfer or assign or otherwise
encumber them in an amount exceeding the amount of the borrowing secured
thereby.
7. Underwrite securities issued by others except to the extent the Company may
be deemed to be an underwriter, under the Federal securities laws, in connection
with the disposition of its portfolio securities.
8. Purchase securities of other investment companies, except (a) in connection
with a merger, consolidation, reorganization or acquisition of assets or (b) a
Fund may purchase securities of closed-end investment companies up to (i) 3% of
the outstanding voting stock of any one investment company (including for this
purpose investments by any other series of the Company), (ii) 5% of the total
assets of the Fund with respect to any one investment company and (iii) 10% of
the total assets of the Fund in the aggregate.
9. Participate on a joint or a joint and several basis in any trading account in
securities.
10. Issue senior securities (as defined in the Act), other than as set forth in
paragraph 6 above and except to the extent that foreign currency forward
contracts may be deemed to constitute a senior security.
11. Invest in commodities or commodity futures contracts, except that each Fund
may enter into forward foreign exchange contracts and may invest up to 5% of its
net assets in initial margin or premiums for futures contracts or options on
futures contracts.
Non-Fundamental Investment Restrictions. Each Fund has also adopted certain
investment restrictions which are deemed non-fundamental which cannot be
changed without a vote of the majority of the Fund Directors.
In addition to non-fundamental restrictions stated elsewhere, each Fund may not:
1. Make short sales of securities on margin, except for such short-term credits
as are necessary for the clearance of transactions. (Management may recommend to
the Board removal of this restriction.)
2. Invest more than 15% of the Fund's net assets in securities which cannot be
readily resold to the public because there are no market quotations readily
available because of legal or contractual restrictions or because there are no
market quotations readily available or in other " illiquid securities (including
non-negotiable deposits with banks and repurchase agreements of a duration of
more than seven days).
If a percentage restriction (other than the restriction on borrowing in
paragraph 6) is adhered to at the time of investment, a subsequent increase or
decrease in the percentage beyond the specified limit resulting from a change in
value or net assets will not be considered a violation. Whenever any investment
policy or investment restriction states a maximum percentage of a Fund's assets
which may be invested in any security or other property, it is intended that
such maximum percentage limitation be determined immediately after and as a
result of the acquisition of such security or property.
Risk Considerations. Investors should carefully consider the risks involved in
investments in securities of companies and governments of foreign nations, which
add to the usual risks inherent in domestic investments. Such special risks
include the lower level of government supervision and regulation of stock
exchanges, broker-dealers and listed companies, fluctuations in foreign exchange
rates, future political and economic developments, and the possible imposition
of exchange controls or other foreign governmental laws or restrictions. In
addition, securities prices
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in foreign countries are generally subject to different economic, financial,
political and social factors than prices of securities of United States issuers.
The Company anticipates that the portfolio securities of foreign issuers held by
each Fund generally will not be registered with the SEC nor will the issuers
thereof be subject to the reporting requirements of such agency. In addition,
the governments under which these companies are organized may impose less
government supervision than is required in the United States. Accordingly, there
may be less publicly available information concerning certain of the issuers of
securities held by the Funds than is available concerning United States
companies. In addition, foreign companies are not generally subject to uniform
accounting, auditing and financial reporting standards or to practices and
requirements comparable to those applicable to United States companies.
It is contemplated that the Funds' foreign portfolio securities generally will
be purchased on stock exchanges or in over-the-counter markets located in the
countries in which the principal offices of the issuers of the various
securities are located, if that is the best available market. Foreign stock
exchanges generally have substantially less volume than the New York Stock
Exchange and may be subject to less government supervision and regulation than
those in the United States. Accordingly, securities of foreign companies may be
less liquid and more volatile than securities of comparable United States
companies. Similarly, volume and liquidity in most foreign bond markets is less
than in the United States and, at times, price volatility can be greater than in
the United States.
The Funds may also invest in American Depositary Receipts ("ADRs") or European
Depositary Receipts ("EDRs") representing securities of foreign companies,
including both sponsored and unsponsored ADRs. Unsponsored ADRs may be created
without the participation of the foreign issuer. Holders of these ADRs generally
bear all the cost of the ADR facility, whereas foreign issuers typically bear
certain costs in a sponsored ADR. The bank or trust company depository of an
unsponsored ADR may be under no obligation to distribute shareholder
communications received from the foreign issuer or to pass through voting
rights. The markets for ADRs and EDRs, especially unsponsored ADRs, may be
substantially more limited and less liquid than the markets for the underlying
securities.
Foreign broker-dealers also may be subject to less government supervision than
those in the United States. Although the Funds endeavor to achieve the most
favorable net results on their portfolio transactions, fixed commissions for
transactions on certain foreign stock exchanges may be higher than negotiated
commissions available on United States exchanges.
With respect to certain foreign countries, there is the possibility of adverse
changes in investment or exchange control regulations, expropriation or
confiscatory taxation, and limitations on the transfer or exchange of funds or
other assets of the Funds. The Funds' ability and decisions to purchase or sell
portfolio securities may be affected by laws or regulations relating to the
convertibility and repatriation of assets. There is also the risk in certain
foreign countries of political or social instability, or diplomatic developments
which could affect United States investments as well as the prices of securities
in those countries. Moreover, individual foreign economies may differ favorably
or unfavorably from the United States economy in such respects as growth of
gross national product, rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments position.
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Because the shares of the Funds are redeemable on a daily basis in United States
dollars, each Fund intends to manage its portfolio so as to give reasonable
assurance that it will be able to obtain United States dollars to the extent
necessary to meet anticipated redemptions. The Funds do not believe that this
consideration will have any significant effects on their portfolio strategies
under present conditions.
Portfolio Turnover. Portfolio turnover rate is calculated by dividing the lesser
of a Fund's sales or purchases of portfolio securities for the fiscal year
(exclusive of purchases or sales of all securities whose maturities or
expiration dates at the time of acquisition were one year or less) by the
monthly average value of the securities in a Fund's portfolio during the fiscal
year. A portfolio turnover rate in excess of 100% is considered to be high. A
high portfolio turnover rate may result in higher short-term capital gains to
shareholders for tax purposes and increased brokerage commissions and other
transaction costs borne by the Fund.
PERFORMANCE INFORMATION
The average annual total return of each Fund for the periods ended December 31,
1997 set forth in the table below. Average annual total return is computed by
finding the average annual compounded rates of return over the periods indicated
that would equate the initial amount invested in a Fund to the redemption value
at the end of the period. All dividends and distributions are assumed to be
reinvested. The results are shown both with and without deduction of the sales
load, since the sales load can be waived for certain investors.
Average Annual Return
---------------------
After Deduction of Without Deduction
Maximum Sales Load of Sales Load
------------------ -------------
GAM International Fund (Class A)
1 year 22.48% 28.93%
5 years 22.92% 24.18%
10 years 16.51% 17.11%
From inception (1/2/85) 21.18% 21.66%
GAM International Fund (Class D)
1 year 24.28% 28.79%
From inception (9/5/95) 18.43% 20.29%
GAM Global Fund (Class A)
1 year 28.20% 34.95%
5 years 23.68% 24.96%
10 years 15.45% 16.04%
From inception (5/28/86) 13.40% 13.90%
GAM Global Fund (Class D)
1 year 30.08% 34.80%
From inception (9/5/95) 21.57% 23.52%
GAM Pacific Basin Fund (Class A)
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1 year (33.50)% (30.00)%
5 years 2.41% 3.47%
10 years 7.83% 8.39%
From inception (5/6/87) 5.41% 5.91%
GAM Pacific Basin Fund (Class D)
1 year (32.63)% (30.18)%
From inception (9/5/95) (16.03)% (14.66)%
GAM Europe Fund
1 year 21.18% 27.55%
5 years 15.02% 16.52%
From inception (1/1/90) 6.19% 6.88%
GAM North America Fund
1 year 22.94% 29.41%
5 years 15.02% 16.21%
From inception (1/1/90) 13.50% 14.23%
GAM Japan Capital Fund
1 year (7.44)% (2.57)%
From inception (7/1/94) (1.47)% (0.02)%
GAM Asian Capital Fund
1 year (38.57)% (35.34)%
From inception (5/12/95) (17.21)% (15.58)%
GAMerica Capital Fund
1 year 30.41% 37.28%
From inception (5/12/95) 18.47% 20.80%
Prospective investors should note that past results may not be indicative of
future performance. The investment return and principal value of shares of a
Fund will fluctuate so that an investor's shares, when redeemed, may be worth
more or less than their original cost.
Comparative performance information may be used from time to time in advertising
each Fund's shares. The performance of GAM Global Fund may be compared to the
Morgan Stanley Capital International (MSCI) World Index. The performance of GAM
International Fund may be compared to the MSCI Europe, Australia, Far East
(EAFE) Index. The performance of GAM Pacific Basin Fund may be compared to the
MSCI Pacific Index. The performance of GAM Asian Capital Fund may be compared to
the MSCI Combined Far East Index ex Japan. The performance of GAM Japan Capital
Fund may be compared to the Tokyo Stock Exchange Index. The performance of GAM
North America Fund and GAMerica Capital Fund may be compared to the Standard &
Poor's 500 Composite Stock Price Index and the Dow Jones Industrial Average. The
performance of GAM Europe Fund may be compared to the MSCI Europe and Financial
Times Actuaries World Indices--Europe. Each stock index is an unmanaged index of
common stock prices, converted into U.S. dollars where appropriate. Any index
selected by a Fund may not compute total return in the same manner as the Funds
and may exclude, for example, dividends paid on stocks included in the index and
brokerage or other fees.
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NET ASSET VALUE, DIVIDENDS AND TAXES
Net Asset Value. Each Fund determines its net asset value each day the New York
Stock Exchange is open for trading. The New York Stock Exchange is closed on the
following holidays, in addition to Saturdays and Sundays: New Year's Day,
President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
Portfolio securities, including ADR's, EDR's and options, which are traded on
stock exchanges or a national securities market will be valued at the last sale
price as of the close of business on the day the securities are being valued or,
lacking any sales, at the last available bid price. Securities traded in the
over-the-counter market will be valued at the last available bid price in the
over-the-counter market prior to the time of valuation. Money market securities
will be valued at market value, except that instruments maturing within 60 days
of the valuation are valued at amortized cost. The other securities and assets
of each Fund for which market quotations may not be readily available (including
restricted securities which are subject to limitations as to their sale) will be
valued at fair value as determined in good faith by or under the direction of
the Board of Directors. Securities quoted in foreign currencies will be
converted to United States dollar equivalents using prevailing market exchange
rates.
Suspension of the Determination of Net Asset Value. The Board of Directors may
suspend the determination of net asset value and, accordingly, redemptions for a
Fund for the whole or any part of any period during which (1) the New York Stock
Exchange is closed (other than for customary weekend and holiday closings), (2)
trading on the New York Stock Exchange is restricted, (3) an emergency exists as
a result of which disposal of securities owned by the Fund is not reasonably
practicable or it is not reasonably practicable for the Fund fairly to determine
the value of its net assets, or (4) the Securities and Exchange Commission may
by order permit for the protection of the holders of the Fund's shares.
Tax Status. Although each Fund is a series of the Company, it is treated as a
separate corporation for purposes of the Internal Revenue Code of 1986, as
amended (the "Code"). Each Fund expects to meet certain diversification-of-
assets and other requirements in order to qualify under the Code as a regulated
investment company. If it qualifies, a Fund will not be subject to United States
Federal income tax on net ordinary income and net capital gains which are
distributed to its shareholders within certain time periods specified in the
Code. Each Fund intends to distribute annually all of its net ordinary income
and net capital gains. If a Fund were to fail to distribute timely substantially
all such income and gains, it would be subject to Federal corporate income tax
and, in certain circumstances, a 4% excise tax on its undistributed income and
gains.
Distributions from net ordinary income and net short-term capital gains are
taxable to shareholders as ordinary income. The 70% deduction available to
corporations for dividends received from a Fund will apply to ordinary income
distributions only to the extent that they are attributable to a Fund's dividend
income from United States corporations. Distributions from net long-term capital
gains are taxable to a shareholder as long-term capital gains regardless of the
length of time the shares in respect of which such distributions are received
have been held by the shareholder. Dividends declared in December will be
treated as received in December as long as they are actually paid before
February 1 of the following year.
Income from foreign securities purchased by a Fund may be reduced by a
withholding tax at the source. If as of the fiscal year-end of a Fund more than
50% of the Fund's assets are invested in
15
<PAGE>
securities of foreign corporations, then the Fund may make an election which
will result in the shareholders having the option to elect either to deduct
their pro rata share of the foreign taxes paid by the Fund or to use their pro
rata share of the foreign taxes paid by the Fund in calculating the foreign tax
credit to which they are entitled. Distributions by a Fund will be treated as
United States source income for purposes other than computing the foreign tax
credit limitation.
Distributions of net ordinary income or net short-term capital gains received by
a non-resident alien individual or foreign corporation which is not engaged in a
trade or business in the United States generally will be subject to Federal
withholding tax at the rate of 30%, unless such rate is reduced by an applicable
income tax treaty to which the United States is a party. However, gains from the
sale by such shareholders of shares of the Funds and distributions to such
shareholders from long-term capital gains generally will not be subject to the
Federal withholding tax.
Ordinarily, distributions and redemption proceeds earned by a United States
shareholder of a Fund are not subject to withholding of Federal income tax.
However, distributions or redemption proceeds paid by a Fund to a shareholder
may be subject to 20% backup withholding if the shareholder fails to supply the
Fund or its agent with such shareholder's taxpayer identification number or an
applicable exemption certificate.
In addition to the Federal income tax consequences described above relating to
an investment in a Fund, there may be other Federal, state or local tax
considerations that depend upon the circumstances of each particular investor.
Prospective shareholders are therefore urged to consult their tax advisors with
respect to the effect of this investment on their own specific situations.
16
<PAGE>
MANAGEMENT OF THE COMPANY
The name, address, principal occupation during the past five years and other
information with respect to each of the Directors and Executive Officers of the
Company are as follows:
Name and Address:
Position(s) Held Principal Occupation(s)
With the Company During Past Five Years
---------------- ----------------------
Gilbert de Botton* Chairman, Global Asset Management Limited,
Director/President investment adviser, and Global Asset
12 St. James's Place Management (U.K.) Ltd., holding company,
London SWlA 1NX 1983 to present; Vice President, Global
England Asset Management Limited (Bermuda),
investment adviser, 1989 to present.
George W. Landau Chairman, Latin American Advisory Board of
Director Coca-Cola International, 1988 to present.
2601 South Bayshore Drive Director, Emigrant Savings Bank, Brazil
Suite 1109 Equity Fund, Chile Fund, Latin American
Coconut Grove, FL 33133 Investment Fund, South America Fund, Latin
American Equity Fund, Emerging Markets
Telecommunications Fund, Emerging Markets
Infrastructure Fund, and Fundacion Chile.
Former President, Americas Society and the
Council of the Americas, 1985-1993.
Roland Weiser President, Intervista, business consulting,
Director 1984 to present. Director, GAM Diversity
86 Beekman Road Fund and Unimed Pharmaceuticals, Inc.
Summit, New Jersey 07901 Former Senior Vice President, Schering
Plough Corporation (International).
17
<PAGE>
Kevin Blanchfield Chief Operating Officer, Treasurer and
Vice President/Treasurer Assistant Secretary, Global Asset Management
135 East 57th Street (USA) Inc., GAM Investments, Inc. and GAM
New York, NY 10022 Services Inc., 1995 to present; Vice
President and Treasurer, Global Asset
Management (USA) Inc., GAM Investments, Inc.
and GAM Services Inc., 1993 to 1995; Senior
Vice President - Finance and Administration,
Lazard Freres & Co., 1991 to 1993.
Gordon E. Swartz General Counsel and Secretary, Global Asset
Secretary Management (USA) Inc. and Secretary of GAM
135 East 57th Street Services Inc., 1997 to present. From 1996 to
New York, NY 10022 1997 Attorney/Consultant to Financial
Markets International. From 1994 to 1996
Vice President and Counsel for NatWest
Bancorp. Senior Associate Counsel and Vice
President of The Chase Manhattan Bank NA
from 1990 to 1994.
- ----------
* Mr. de Botton is a director who is an "interested person"
of the Company within the definitions set forth in the Act.
Compensation of Directors and Executive Officers. Each independent Director of
the Company receives annual compensation from the Company of $5,000 per year
plus $500 for each meeting of the Board of Directors attended. Each Director is
reimbursed by the Company for travel expenses incurred in connection with
attendance at Board of Directors meetings. The officers and interested Directors
of the Company do not receive any compensation from the Company.
The name, position(s) and information related to the compensation of each of the
Directors in the most recent fiscal year are as follows.
<TABLE>
<CAPTION>
Pension or
Retirement Total
Aggregate Benefits Accrued Estimated Compensation
Name and Position(s) Compensation as Annual Benefits From the Company
Held From the Part of Company Upon and Fund Complex
With the Company Company Expenses Retirement Paid to Directors
- --------------------- ------------- ------------------- --------------- -------------------
<S> <C> <C> <C> <C>
Gilbert de Botton $0 $0
Director and
President
George W. Landau $7,000 $7,000
Director
</TABLE>
18
<PAGE>
<TABLE>
<S> <C> <C>
Roland Weiser $8,000 $8,000
Director
</TABLE>
19
<PAGE>
Principal Holders of Securities. As of January 31, 1998, all Directors and
Officers of the Funds as a group owned beneficially or of record less than 1% of
the outstanding securities of any Fund except GAMerica Capital Fund, of which
the group held 2.5%. To the knowledge of the Funds, as of January 31, 1998, no
Shareholders owned beneficially (b) or of record (r) more than 5% of a Fund's
outstanding shares, except as set forth below. Mr. Gilbert de Botton, President
and Director of the Company, may be deemed to have shared voting or investment
power over shares owned by clients or held by custodians or nominees for clients
of Global Asset Management (USA) Inc. or other affiliates of GAM, or by employee
benefit plans for the benefit of employees of GAM and its affiliates, as a
result of the indirect ownership of interests in GAM and its affiliates by a
trust of which Mr. de Botton is a potential beneficiary. Mr. de Botton disclaims
beneficial ownership of such shares.
<TABLE>
<CAPTION>
INTERNATIONAL GLOBAL PACIFIC BASIN
Class A Class D Class A Class D Class A Class D
<C> <C> <C> <C> <C> <C>
Naidot & Co. 7.74%
c/o Bessemer Trust Co
100 Woodbridge Center Drive
Woodbridge, NJ 07095
FTC & Co. 11.54%
Attn: Datalynx
P0 Box 173736
Denver, CO 80217
National City TRSTE 10.80%
JDR&P GAM Inv. 2 DEF BEN
Attn: Trust Mutual Funds 617444906
P0 Box 94777
Cleveland, Ohio 44101-4777
Key Trust Co of OH NA Cust. 61.80%
University Orthopaedic Assoc.
Pension Plan
P0 Box 94870
Cleveland, Ohio 44101-4870
Fayez Sarofim & Co.
P0 Box 52830
Houston, TX 77052-2830
Resources Trust Company
for The Exclusive Benefit
Of Various Customers of IMS
P0 Box 3865
Englewood, CO 80 155-3865
NFSC FEBO X08-088536
Abdulla Omaran & Latifa Omran
NAJD 16 Roedean Way
Brighton, BN 25 RI England
NFSC FEBO X03-152595
Ola Omran
NAJD 16 Roedean Way
Brighton, BN 25 RJ England
Merrill Lynch Special 11.60% 9.37%
Custody a/c for the Exclusive
Benefit of Cust. of MLPF & S
Attn: GAM Funds Service Team
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
Mark E. Gilbert
Advantage Account
155 Howe Street
Martinez, CA 94553
Lehman Brothers Inc
FBO 834-04554-12
P0 Box 29198
Brooklyn, NY 11202-9198
Terry J Crofoot
and Kelly Crofoot JTWROS
Advantage account
P0 Box 53188
Lubbock, TX 79453
Lehman Brothers Inc
FBO 834-04555-11
PO Box 29198
Brooklyn, NY 11202-9198
Jan I Shrem &
Mitsuko Shrem JT TEN
c/o Rothschilds Bank AG
Zollikerstrasse 181
CH-8034 Zurich, Switzerland
Attn. M. Steiger
Post & Co. a/c 974792
c/o Bank of NY
Mutual Fund Reorg Dept
PO Box 1066
Wall Street Station
New York, NY 10268
Sam W. Klein TRSTE
FBO The S. Klein 1973
Declaration of TRST
U/A Dtd 1973
c/o Rothschilds Bank AG
Zollikerstrasse 181
CH-8034 Zurich, Switzerland
Attn. M. Steiger
Prudential Securities Inc. FBO
Ronald Cooper John Trobaugh
Barney Abis Co-Trustees
Delta Foremost Chem Corp PS Plan
One Seaport Plaza
New York, NY 10292
Bankers Trust Company
FBO 2448842424
P0 Box 9005
Church Street Station
New York, NY 10008
Royal Life Insurance International Ltd. 6.50%
FBO Acct. 6511
Royal Court, Castletown
Isle of Man, British Isle
IM9 1RA
Donaldson Lufkin Jenrette 5.62%
Securities Corporation Inc.
P0 Box 2052
Jersey City, NJ 07303-9998
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
NORTH JAPAN ASIAN
EUROPE AMERICA CAPITAL CAPITAL GAMERICA
<C> <C> <C> <C> <C>
Naidot & Co.
c/o Bessemer Trust Co
100 Woodbridge Center Drive
Woodbridge, NJ 07095
FTC & Co.
Attn: Datalynx
P0 Box 173736
Denver, CO 80217
National City TRSTE 13.14%
JDR&P GAM Inv. 2 DEF BEN
Attn: Trust Mutual Funds 617444906
P0 Box 94777
Cleveland, Ohio 44101-4777
Key Trust Co of OH NA Cust.
University Orthopaedic Assoc.
Pension Plan
P0 Box 94870
Cleveland, Ohio 44101-4870
Fayez Sarofim & Co. 21.46%
P0 Box 52830
Houston, TX 77052-2830
Resources Trust Company 16.78% 14.12% 16.96%
for The Exclusive Benefit
Of Various Customers of IMS
P0 Box 3865
Englewood, CO 80 155-3865
NFSC FEBO X08-088536 6.76%
Abdulla Omaran & Latifa Omran
NAJD 16 Roedean Way
Brighton, BN 25 RI England
NFSC FEBO X03-152595 5.95%
Ola Omran
NAJD 16 Roedean Way
Brighton, BN 25 RJ England
Merrill Lynch Special 5.93%
Custody a/c for the Exclusive
Benefit of Cust. of MLPF & S
Attn: GAM Funds Service Team
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
Mark E. Gilbert 12.39%
Advantage Account
155 Howe Street
Martinez, CA 94553
Lehman Brothers Inc 6.74%
FBO 834-04554-12
P0 Box 29198
Brooklyn, NY 11202-9198
Terry J Crofoot 5.47%
and Kelly Crofoot JTWROS
Advantage account
P0 Box 53188
Lubbock, TX 79453
Lehman Brothers Inc 5.06%
FBO 834-04555-11
PO Box 29198
Brooklyn, NY 11202-9198
Jan I Shrem & 5.00% 5.48% 15.02%
Mitsuko Shrem JT TEN
c/o Rothschilds Bank AG
Zollikerstrasse 181
CH-8034 Zurich, Switzerland
Attn. M. Steiger
Post & Co. a/c 974792 7.56%
c/o Bank of NY
Mutual Fund Reorg Dept
PO Box 1066
Wall Street Station
New York, NY 10268
Sam W. Klein TRSTE 6.12%
FBO The S. Klein 1973
Declaration of TRST
U/A Dtd 1973
c/o Rothschilds Bank AG
Zollikerstrasse 181
CH-8034 Zurich, Switzerland
Attn. M. Steiger
Prudential Securities Inc. FBO 5.18%
Ronald Cooper John Trobaugh
Barney Abis Co-Trustees
Delta Foremost Chem Corp PS Plan
One Seaport Plaza
New York, NY 10292
Bankers Trust Company 5.91%
FBO 2448842424
P0 Box 9005
Church Street Station
New York, NY 10008
Royal Life Insurance International Ltd.
FBO Acct. 6511
Royal Court, Castletown
Isle of Man, British Isle
IM9 1RA
Donaldson Lufkin Jenrette
Securities Corporation Inc.
P0 Box 2052
Jersey City, NJ 07303-9998
</TABLE>
21
<PAGE>
INVESTMENT ADVISORY AND OTHER SERVICES
Investment Advisory Contracts. The Amended and Restated Investment Advisory
Contract dated April 14, 1994 (the "GAM Contract") between the Company and GAM,
as amended, was last approved by the Board of Directors (including a majority of
the Directors who were not parties to the GAM Contract or interested persons of
any such party) on behalf of each Fund on November 6, 1997 and by the
shareholders of each Fund (other than GAM Japan Capital Fund, GAMerica Capital
Fund and GAM Asian Capital Fund) on April 14, 1994. The investment advisory
agreement dated June 29, 1990 between the Company and Sarofim (the "Sarofim
Contract") was last approved by the Board of Directors, including a majority of
the Directors who are not parties to the Sarofim Contract or interested persons
of any such party, on November 6, 1997 and by the shareholders of GAM North
America Fund on April 14, 1994. The GAM Contract and the Sarofim Contract will
each continue in effect from year to year thereafter if approved annually by the
Board of Directors or by the vote of a majority of the outstanding shares of
each Fund (as defined in the Act) and, in either event, by the approval of a
majority of those Directors who are not parties to the GAM Contract or the
Sarofim Contract or interested persons of any such party.
The GAM Contract requires GAM to conduct and maintain a continuous review of
each Fund's portfolio and to make all investment decisions regarding purchases
and sales of portfolio securities and brokerage allocation for each Fund other
than GAM North America Fund. GAM will render its services to each fund from
outside the United States. The Sarofim Contract requires Sarofim to provide the
same services to GAM North America Fund subject to the supervision and oversight
of GAM. Sarofim commenced providing investment advisory services to GAM North
America Fund on June 29, 1990.
The GAM Contract and the Sarofim Contract (the "Contracts") each provides that
the Investment Advisers will select brokers and dealers for execution of each
Fund's portfolio transactions consistent with the Company's brokerage policy
(see "Brokerage Allocation"). Although the services provided by broker-dealers
in accordance with the brokerage policy incidentally may help reduce the
expenses of or otherwise benefit the other investment advisory clients of the
Investment Advisers or their affiliates, as well as the Funds, the value of such
services is indeterminable and the Investment Advisers' fees are not reduced by
any offset arrangement by reason thereof.
Each of the Contracts provides that the Investment Advisers shall have no
liability to the Company or to any shareholder of a Fund for any error of
judgment, mistake of law, or any loss arising out of any investment or other act
or omission in the performance by an Investment Adviser of its duties under such
Contracts or for any loss or damage resulting from the imposition by any
government of exchange control restrictions which might affect the liquidity of
a Fund's assets maintained with custodians or securities depositories in foreign
countries or from any political acts of any foreign governments to which such
assets might be exposed, except for liability resulting from willful
misfeasance, bad faith or gross negligence on the Investment Adviser's part or
reckless disregard of its duties under the Contract.
Each Contract will terminate automatically in the event of its assignment, as
such term is defined under the Act, and may be terminated by each Fund at any
time without payment of any penalty on 60 days' written notice, with the
approval of a majority of the Directors of the Company or by vote of a majority
of the outstanding shares of a Fund (as defined in the Act).
22
<PAGE>
The Company acknowledges that it has obtained its corporate name by consent of
GAM and agrees that if (i) GAM should cease to be the Company's investment
adviser or (ii) Global Asset Management Ltd. should cease to own a majority
equity interest in GAM, the Company, upon request of GAM, shall submit to its
shareholders for their vote a proposal to delete the initials "GAM" from its
name and cease to use the name "GAM Funds, Inc." or any other name using or
derived from "GAM" or "Global Asset Management, any component thereof or any
name deceptively similar thereto, and indicate on all letterheads and other
promotional material that GAM is no longer the Company's investment adviser. If
GAM makes such request because Global Asset Management Ltd. no longer owns a
majority equity interest in GAM, the question of continuing the GAM Contract
must be submitted to a vote of the Company's shareholders. The Company has
agreed that GAM or any of its successors or assigns may use or permit the use of
the names "Global Asset Management" and "GAM" or any component or combination
thereof in connection with any entity or business, whether or not the same
directly or indirectly competes or conflicts with the Company and its business
in any manner.
Advisory Fees. For its services to the Funds, GAM receives a quarterly fee of
0.25% of the average daily net assets of each of GAM International Fund, GAM
Global Fund, GAM Pacific Basin Fund, GAM Japan Capital Fund, GAM Asian Capital
Fund, GAMerica Capital Fund and GAM Europe Fund during the quarter preceding
each payment; and GAM and Sarofim each receives a quarterly fee equal to 0.125%
of the average daily net assets of GAM North America Fund. In each case the
aggregate advisory fees are equivalent to an annual fee of 1.0% of the average
daily net assets of each Fund during the year. The level of advisory fees paid
by each Fund is higher than the rate of advisory fee paid by most registered
investment companies. The actual advisory fee paid by each Fund during the
fiscal years ended December 31, 1997, 1996 and 1995 are set forth below:
<TABLE>
<CAPTION>
Inter- Pacific North Japan GAMerica Asian
National Global Basin Europe America Capital Capital Capital
-------- ------ ----- ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 $14,631,974 $379,486 $502,073 $366,938 $85,196 $293,314 $22,409 $27,653
1996 $8,746,443 $206,365 $710,064 $270,703 $57,701 $350,646 $23,247 $66,992
1995 $3,085,111 $208,022 $414,221 $203,030 $38,934 $57,489 $16,082 $28,041
</TABLE>
Expenses incurred in connection with each Fund's organization, initial
registration and initial offering under Federal and state securities laws,
including printing, legal and registration fees, and the period over which such
expenses are amortized, are set forth below (except for the expenses of GAM
International Fund, GAM Global Fund, GAM Pacific Basin Fund, GAM Europe Fund and
GAM North American Fund, which have been fully amortized):
Japan GAMerica Asian
Capital Capital Capital
-------------------------------
Organizational Expenses $34,166 $30,036 $30,036
Amortized over 5 years beginning 7/1/94 5/12/95 5/12/95
The expense ratio of each Fund may be higher than that of most registered
investment companies since the cost of maintaining the custody of foreign
securities is higher than that for most domestic
23
<PAGE>
funds and the rate of advisory fees paid by the Funds exceeds that of most
registered investment companies. In addition, each Fund bears its own operating
expenses.
Investment Advisers. All of the Investment Advisers are registered under the
United States Investment Advisers Act of 1940, as amended. GAM is controlled by
and under common control with other investment advisers (as described below)
which have substantial experience managing foreign mutual funds and which have
aggregate assets under management of approximately $11 billion. Sarofim has
aggregate assets under management of approximately $45 billion.
The Directors of GAM and their principal occupations are as follows:
Name and Position Held
with Investment Adviser Principal Occupation
- ---------------------------------------------------------
Gilbert de Botton, Director. See "Management of the Company" above.
Count Ulric von Rosen, Director. President, Bonnier Medical Division of Bonnier
Medical Group, Sweden.
Paul S. Kirkby, Director. Investment Director, Global Asset Management (H.K.)
Ltd.
David J. Miller, Director. Finance Director, Global Asset Management (U.K.) Ltd.
Alan McFarlane, Director. Managing Director (Institutional), Global Asset
Management Ltd., investment adviser.
Denis G. Raeburn, Director. Managing Director, Global Asset Management Ltd. and
Global Asset Management (U.K.) Ltd., holding company.
Gordon Grender, Director. Investment manager.
GAM is a wholly-owned subsidiary of Global Asset Management (U.K.) Limited, a
holding company. Global Asset Management Ltd., an investment adviser organized
under the laws of Bermuda, controls the Investment Adviser through its
wholly-owned subsidiaries, Greenpark Management N.V. and GAMAdmin B.V. (the
latter of which is the direct parent of Global Asset Management (U.K.) Limited).
Lorelock, SA., which is controlled directly by Metrolis Anstalt, a Lichtenstein
company, and indirectly by a discretionary trust of which Mr. de Botton, a
Director and President of the Fund, may be deemed to be a beneficiary, owns
approximately 70% of the voting securities of Global Asset Management Ltd. St.
James's Place Capital plc, an international, diversified financial services
company, owns approximately 30%. St. James's Place Capital plc controls,
individually and collectively and directly and indirectly, a number of
subsidiaries, which provide financial services and investment management
services for various investment companies, among others, and which are involved
internationally in various financial service businesses.
The Directors and principal executive officers of Sarofim and their principal
occupations are as follows:
Fayez S. Sarofim Chairman, Director and President, Sarofim
24
<PAGE>
Raye G. White Executive Vice President, Secretary
-Treasurer and Director, Sarofim
Ralph B. Thomas Senior Vice President, Sarofim
William K. McGee, Jr. Senior Vice President, Sarofim
Russell M. Frankel Senior Vice President, Sarofim
Charles E. Sheedy Senior Vice President, Sarofim
Russell B. Hawkins Senior Vice President, Sarofim
A majority of the outstanding stock of Sarofim is owned by Fayez S. Sarofim. In
addition, Mr. Sarofim is a director of Allegheny Teledyne, Inc., Unitrin, Inc.,
Argonaut Group, Imperial Holly Corp. and EXOR Group, each of which is a publicly
traded corporation with principal offices in the United States. Mr. Sarofim is a
past director of Teledyne, Inc., MESA, Inc., Alley Theatre, Houston Ballet
Foundation and the Museum of Fine Arts Houston.
Principal Underwriter and Plans of Distribution. The Company has entered into
distribution agreements (the "Distribution Agreements") with GAM Services under
which GAM Services has agreed to act as principal underwriter and to use
reasonable efforts to distribute each Fund's Class A, Class B, Class C and Class
D shares. GAM Services is an indirect wholly-owned subsidiary of Global Asset
Management Ltd., which also controls GAM.
Pursuant to the Distribution Agreements, GAM Services receives the sales load on
sales of each Class of the Funds' shares and reallows a portion of the sales
load to dealers/brokers. GAM Services also receives the distribution fees
payable pursuant to the Funds' Plans of Distribution for Class A, Class B, Class
C and Class D Shares described below (the "Plans"). The Distribution Agreements
may be terminated at any time upon 60 days' written notice, without payment of a
penalty, by GAM Services, by vote of a majority of the outstanding class of
voting securities of the affected Fund, or by vote of a majority of the
Directors of the Fund who are not "interested Persons" of the Fund and who have
no direct or indirect financial interest in the operation of the Distribution
Agreements. The Distribution Agreements will terminate automatically in the
event of their assignment.
In addition to the amount paid to dealers pursuant to the sales charge table in
the Prospectus, GAM Services from time to time may offer assistance to dealers
and their registered representatives in the form of business and educational or
training seminars. Dealers may not use sales of any of the Funds' shares to
qualify for or participate in such programs to the extent such may be prohibited
by a dealer's internal procedures or by the laws of any state or any
self-regulatory agency, such as the National Association of Securities Dealers,
Inc. Costs associated with incentive or training programs are borne by GAM
Services and paid from its own resources or from fees collected under the Plans.
GAM Services from time to time may reallow all or a portion of the sales charge
on Class A and Class D shares to individual selling dealers. Such additional
reallowance generally will be made only when the selling dealer commits to
substantial marketing support such as internal wholesaling through dedicated
personnel, internal communications and mass mailings.
25
<PAGE>
Each Fund has adopted separate distribution plans under Rule 12b-1 of the 1940
Act for each class of its shares The Plans permit each Fund to compensate GAM
Services in connection with activities intended to promote the sale of each
class of shares of each Fund. Pursuant to the Plan for Class A shares, each Fund
may pay GAM Services up to 0.30% of average daily net assets of the Fund's Class
A shares. Under the Plan for Class B shares, each Fund may pay GAM Services up
to 1.00% of daily net assets of the Fund's Class B shares. The Class C shares
under the Plan for Class C shares may pay GAM Services up to 1.00% of daily net
assets of the Fund's Class C shares. Under the Plan for Class D shares, each
Fund may pay GAM Services up to 0.50% of the average daily net assets
attributable to Class D shares of the Fund. Expenditures by GAM Services under
the Plans may consist of: (i) commissions to sales personnel for selling shares
of the Funds; (ii) compensation, sales incentives and payments to sales,
marketing and service personnel; (iii) payments to broker-dealers and other
financial institutions that have entered into agreements with GAM Services in
the form of a Dealer Agreement for GAM Funds, Inc. for services rendered in
connection with the sale and distribution of shares of the Funds; (iv) payment
of expenses incurred in sales and promotional activities, including advertising
expenditures related to the Funds; (v) the costs of preparing and distributing
promotional materials; (vi) the cost of printing the Funds' Prospectus and SAI
for distribution to potential investors; and (vii) other activities that are
reasonably calculated to result in the sale of shares of the Funds.
A portion of the fees paid to GAM Services pursuant to the Plans not exceeding
0.25% annually of the average daily net assets of each Fund's shares may be paid
as compensation for providing services to each Fund's shareholders, including
assistance in connection with inquiries related to shareholder accounts (the
'Service Fees'). In order to receive Service Fees under the Plans, participants
must meet such qualifications as are established in the sole discretion of GAM
Services, such as services to each Fund's shareholders; services providing each
Fund with more efficient methods of offering shares to coherent groups of
clients, members or prospects of a participant; services permitting more
efficient methods of purchasing and selling shares, or transmission of orders
for the purchase or sale of shares by computerized tape or other electronic
equipment; or other processing.
The Directors have concluded that there is a reasonable likelihood that the
Plans will benefit each Fund and its shareholders and that the Plans should
result in greater sales and/or fewer redemptions of Fund shares. On a quarterly
basis, the Directors will review a report on expenditures under the Plans and
the purposes for which expenditures were made. The Directors will conduct an
additional, more extensive review annually in determining whether the Plans
shall be continued. Continuation of the Plans from year to year is contingent on
annual approval by a majority of the Directors acting separately on behalf of
each Fund and class and by a majority of the Directors who are not 'interested
persons" (as defined in the 1940 Act) and who have no direct or indirect
financial interest in the operation of the Plans or any related agreements (the
"Plan Directors"). The Plans provide that they may not be amended to increase
materially the costs that a Fund may bear pursuant to the applicable Plan
without approval of the shareholders of the affected class of shares of each
Fund and that other material amendments to the Plans must be approved by a
majority of the Plan Directors acting separately on behalf of each Fund, by vote
cast in person at a meeting called for the purpose of considering such
amendments. The Plans further provide that while each Plan is in effect, the
selection and nomination of Directors who are not "interested persons" shall be
committed to the discretion of the Directors who are not "interested persons." A
Plan may be terminated at any time by vote of a majority of the Plan Directors
or a majority of the outstanding Class of shares of the affected Fund to which
the Plan relates.
The total dollar amount (000's omitted) and manner in which amounts paid by each
class of shares of the Funds under the Plans during the last fiscal year were
spent is set forth below:
26
<PAGE>
GAM International GAM Global GAM Pacific Basin
Fund Fund Fund
Class A Class D Class A Class D Class A Class D
Advertising $ 21 $ 7 $ 7 $ 6 $ 7 $ 6
Printing/Mailing to
Potential Investors 514 29 38 1 24 1
Compensation to Underwriters 701 335 18 - 24 -
Compensation to Dealers 3,508 - 92 9 120 10
Compensation to Sales
Personnel 1,362 94 61 4 50 4
Other* 359 31 25 1 18 1
-------------- --------------- ----------------
Total Disbursements $6,465 $496 $241 $21 $243 $22
============== =============== ================
GAM Japan GAM GAM North
Capital Fund Europe Fund America Fund
Class A Class A Class A
Advertising $ 7 $ 7 $ 6
Printing/Mailing to
Potential Investors 50 30 7
Compensation to Underwriters 11 18 4
Compensation to Dealers 73 92 21
Compensation to Sales
Personnel 48 41 9
Other* 18 15 4
-------------- ------------- ----------------
Total Disbursements $ 207 $ 203 $ 51
============== ============= ================
GAM Asian GAMerica
Capital Fund Capital Fund
Class A Class A
--------------- ----------------
Advertising $ 6 $ 6
Printing/Mailing to
Potential Investors 7 1
Compensation to Underwriters 1 1
Compensation to Dealers 7 6
Compensation to Sales
Personnel 3 4
Other* 1 1
--------------- ----------------
Total Disbursements $ 25 $ 19
=============== ================
- ----------
*Includes travel and entertainment costs of internal sales personnel,
communications costs, establishment costs for regional sales personnel and
fulfillment expenses.
-------------------------
27
<PAGE>
The aggregate dollar amount of underwriting commissions and the amount retained
by the Distributor for each of the last two fiscal years is as follows:
1997
(000's omitted)
Class A Class D
------------------------- ------------------------
After After
Aggregate Reallowance Aggregate Reallowance
GAM International Fund $ 9,147 $ 2,345 $ 1,321 $ 463
GAM Global Fund 639 173 228 28
GAM Pacific Basin Fund 85 25 25 6
GAM North America Fund 38 11
GAM Europe Fund 35 13
GAM Japan Capital Fund 267 76
GAM Asian Capital Fund 22 11
GAMerica Capital Fund 5 4
1996
(000's omitted)
Class A Class D
------------------------- ------------------------
After After
Aggregate Reallowance Aggregate Reallowance
International Fund $9,386 $3,591 $584 $199
Global Fund 217 65 23 7
28
<PAGE>
Pacific Basin Fund 215 91 15 6
Japan Capital Fund 122 59 NA
Asian Capital Fund 6 3 N/A
Europe Fund 17 11 N/A
North America Fund 9 2 N/A
GAMerica Fund - - N/A
Custodian and Administrator. Brown Brothers Harriman & Co., 40 Water Street,
Boston, Massachusetts 02109 ("Brown Brothers"), serves as custodian of the
Company's securities and cash and as its fund accounting agent and
administrator. As such, Brown Brothers maintains certain records for the Company
required by the Act and applicable Federal and state tax laws, keeps books of
account, renders reports and statements, including financial statements, and
disburses funds in payment of the Company's bills and obligations.
Brown Brothers is reimbursed by the Company for its disbursements, expenses and
charges (including counsel fees but excluding salaries and usual overhead
expenses) incurred in connection with the foregoing services and receives a fee
from the Company based on a fee schedule in effect from time to time (which is
based on the net asset value of each Fund). The agreement provides for
termination by either party on 60 days' written notice.
Transfer Agent. Chase Global Funds Service Company, P.O. Box 2798, Boston,
Massachusetts 02208, serves as shareholder service agent, dividend-disbursing
agent, transfer agent and registrar for the Funds. The Funds also engage other
entities to act as shareholder servicing agents and to perform subaccounting
services for the benefit of discrete groups of Fund shareholders.
Legal Counsel. Coudert Brothers, 1114 Avenue of the Americas, New York, New York
10036, acts as legal counsel for the Funds and GAM.
Independent Accountants. Coopers & Lybrand L.L.P., 1301 Avenue of the Americas,
New York, New York 10019-6013, are the independent accountants for the Company
for the fiscal year ending December 31, 1997. In addition to reporting annually
on the financial statements of each Fund, the Company's accountants will review
certain filings of the Company with the SEC and will prepare the Company's
Federal and state corporation tax returns.
29
<PAGE>
Reports to Shareholders. The fiscal year of the Company ends on December 31.
Shareholders of each Fund will be provided at least semi-annually with reports
showing the portfolio of the Fund and other information, including an annual
report with financial statements audited by independent accountants.
BROKERAGE ALLOCATION
The Contracts provide that the Investment Advisers shall be responsible for the
selection of brokers and dealers for the execution of the portfolio transactions
of each Fund and, when applicable, the negotiation of commissions in connection
therewith.
Purchase and sale orders will usually be placed with brokers who are selected
based on their ability to achieve "best execution" of such orders. "Best
execution" means prompt and reliable execution at the most favorable security
price, taking into account the other provisions hereinafter set forth. The
determination of what may constitute best execution and price in the execution
of a securities transaction by a broker involves a number of considerations,
including the overall direct net economic result to the Fund (involving both
price paid or received and any commissions and other costs paid), the efficiency
with which the transaction is effected, the ability to effect the transaction at
all where a large block is involved, the availability of the broker to stand
ready to execute possibly difficult transactions in the future, and the
financial strength and stability of the broker. Such considerations are weighed
by the Investment Advisers in determining the overall reasonableness of
brokerage commissions.
Each Investment Adviser is authorized to allocate brokerage and principal
business to brokers who have provided brokerage and research services, as such
services are defined in Section 28(e) of the Securities Exchange Act of 1934, as
amended (the "1934 Act"), for the Company and/or other accounts for which the
Investment Adviser exercises investment discretion (as defined in Section
3(a)(35) of the 1934 Act) and, as to transactions for which fixed minimum
commission rates are not applicable, to cause a Fund to pay a commission for
effecting a securities transaction in excess of the amount another broker would
have charged for effecting that transaction, if the Investment Adviser
determines in good faith that such amount of commission is reasonable in
relation to the value of the brokerage and research services provided by such
broker, viewed in terms of either that particular transaction or the Investment
Adviser's overall responsibilities with respect to the Fund and the other
accounts as to which it exercises investment discretion. In reaching such
determination, the Investment Advisers will not be required to place or to
attempt to place a specific dollar value on the research or execution services
of a broker or on the portion of any commission reflecting either of said
services.
Research services provided by brokers to the Investment Advisers includes that
which brokerage houses customarily provide to institutional investors and
statistical and economic data and research reports on particular companies and
industries. Research furnished by brokers may be used by each Investment Adviser
for any of its accounts, and not all such research may be used by the Investment
Advisers for the Funds.
The amount of brokerage commissions paid by each Fund during the four fiscal
years ended December 31, 1997 are set forth below:
<TABLE>
<CAPTION>
Inter- Pacific North Japan GAMerica Asian
national Global Basin Europe America Capital Capital Capital
-------- ------ ----- ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 $4,380,158 $151,482 $238,964 $137,778 $4,728 $159,168 $346 $35,465
</TABLE>
30
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 3,778,350 109,863 362,709 93,545 2,512 139,479 3,385 47,627
1995 706,834 51,949 268,565 149,546 3,906 96,322 6,336 30,158
1994 614,271 209,240 165,154 120,013 2,304 41,233 NA NA
</TABLE>
FINANCIAL STATEMENTS
The audited financial statements of each Fund for the fiscal year ended December
31, 1997 and the report of the Funds' independent auditors in connection
therewith are included in the 1997 Annual Report to Shareholders and are
incorporated by reference in this Statement of Additional Information.
31
<PAGE>
GAM Funds, Inc.
Post-Effective Amendment No. 29
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS:
The following financial statements for the year ended December
31, 1997 are incorporated by reference to the Annual Report to
shareholders of the following funds: GAM International,
Global, Pacific Basin, Europe, Japan Capital, North America,
Asian Capital and GAMerica Capital Funds:
Statements of Investments
Statements of Assets and Liabilities
Statements of Operations
Statements of Changes in Net Assets
Notes to Financial Statements
(b) EXHIBITS:
(1)(a) Articles of Incorporation of Registrant, as amended
or supplemented from time to time, are incorporated
by reference to the Registrant's Registration
Statement on Form N-1A which has been previously
filed with the Commission ("Form N-1A").
(1)(b) Certificate of Correction to the Registrant's
Articles of Incorporation is incorporated by
reference to the Registrant's Form N-SAR filed for
the period ended December 31, 1995.
(1)(c) Articles Supplementary to the Registrant's Articles
of Incorporation increasing number of authorized
shares and classifying shares of each of the Funds as
Class A Shares or Class D Shares are incorporated by
reference to the Registrant's Form N-SAR filed for
the period ended December 31, 1995.
(1)(d) Articles of Amendment to the Registrant's Articles of
Incorporation redesignating the shares of each of the
Funds as Class A Shares are incorporated by reference
to PEA No. 27 to Registrant's Registration Statement
("PEA 27").
(1)(e) Articles Supplementary adding GAM Mid-Cap U.S. Fund
are incorporated by reference to PEA 27.
<PAGE>
(2) Bylaws of Registrant are incorporated herein by
reference to the Registrant's Post-Effective
Amendment No. 4 to the Registration Statement on Form
N-1A, filed on December 31, 1985 ("PEA No. 4").
(3) Not applicable.
(4) Specimen stock certificates of the Registrant are
incorporated herein by reference to PEA No. 4.
(5)(a) Amended and Restated Investment Advisory Agreement
with GAM International Management Limited, dated
April 14, 1994, is incorporated by reference to PEA
No. 27.
(5)(b) Amendment No. 1 to Amended and Restated Investment
Advisory Agreement with GAM International Management
Limited, dated March 10, 1995, is incorporated by
reference to PEA 27 .
(5)(c) Amendment No. 2 to Amended and Restated Investment
Advisory Agreement with GAM International Management
Limited, dated August 17, 1995, is incorporated by
reference to PEA 27.
(5)(d) Investment Advisory Agreement with Fayez Sarofim &
Co., dated June 29, 1990, is incorporated herein by
reference to the Registrant's Post-Effective
Amendment No. 15 to the Registration Statement on
Form N-1A, filed on August 29, 1990.
(5)(e) Investment Advisory Agreement with Forstmann-Leff
Associates Inc., dated August 17, 1995, is
incorporated by reference to PEA 27.
(6)(a) Second Amended and Restated Distribution Agreement
For Class A Shares with GAM Services, Inc. dated
November 1, 1996 is incorporated by reference to the
Registrant's Post-Effective Amendment No. 28 to the
Registration Statement on form N-1A filed on March 3,
1997 ("PEA 28").
(6)(b) First Amended Distribution Agreement For Class D
Shares with GAM Services, Inc., dated November 1,
1996, is filed incorporated by reference to PEA 28.
(6)(c) Amended Form of Dealer Agreement between GAM
Services, Inc. and designated dealers is incorporated
by reference to PEA 28.
(6)(d) Agreement for Distribution of Class B and Class C
shares will be filed by amendment.
(7) Not Applicable.
(8) Custodian Agreement with Brown Brothers Harriman &
Co., dated April 26, 1995, is incorporated by
reference to PEA 26.
(9) Transfer Agency Agreement with Chase Global Funds
Service Company (as successor to AIM Financial
Services, Inc.), as amended, is incorporated herein
by reference to the Registrant's Post-Effective
Amendment No. 2 to the Registration Statement on Form
N-1A, filed on June 26, 1985, the Registrant's
Post-Effective Amendment No. 6 to the Registration
Statement on Form N-1A, filed on October 31, 1986,
and the Registrant's Post-Effective Amendment No. 11
to the Registration Statement on Form N-1A, filed on
April 27, 1989.
<PAGE>
(9)(b) Administration Agreement with Brown Brothers Harriman
& Co. dated October 1, 1995 is incorporated by
reference to PEA 28.
(10) Opinion of Counsel will be filed by amendment
(11) Consent of Coopers & Lybrand L.L.P. will be filed
by amendment.
(12) Not Applicable.
(13)(a) Subscription Agreement with Global Asset Management
(USA) Inc. for shares of GAM Mid-Cap U.S. Fund, dated
September 5, 1995, is incorporated by reference to
PEA 27.
(14) Not Applicable.
(15)(a) Class D Distribution Plan adopted by the Registrant
pursuant to Rule 12b-1 under the Investment Company
Act of 1940, as amended, (the "1940 Act") is
incorporated by reference to PEA 27.
(15)(b) Class A Distribution Plan adopted by the Registrant
pursuant to Rule 12b-1 under the 1940 Act is
incorporated by reference to PEA 28.
(15)(c) Class B and Class C Distribution Plans adopted by the
Registrant pursuant to Rule 12b-1 under the 1940 Act
will be filed by amendment.
(16) Schedule of computation of performance quotations
provided in the Statement of Additional Information
will be filed by amendment.
(17) Financial Data Schedules will be filed by amendment.
(18) Amended Multiple Class Plan For Class A and D Shares
adopted by the Registrant pursuant to Rule 18f-3
under the 1940 Act incorporated by reference to
PEA 28.
(19) Powers of Attorney for Mr. Weiser, Mr. Landau and
Mr. de Botton are incorporated by reference to PEA
28.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
N/A
<PAGE>
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
Number of Record Holders
Title of Series as of January 31, 1998
--------------- -------------------------
GAM International Fund
Class A Common Stock 33,927
Class D Common Stock 3,593
GAM Global Fund
Class A Common Stock 2,117
Class D Common Stock 279
GAM Pacific Basin Fund
Class A Common Stock 791
Class D Common Stock 57
GAM Europe Fund
Class A Common Stock 245
GAM North America Fund
Class A Common Stock 140
GAM Japan Capital Fund
Class A Common Stock 486
GAMerica Capital Fund
Class A Common Stock 65
GAM Asian Capital Fund
Class A Common Stock 95
ITEM 27. INDEMNIFICATION.
All officers, directors, employees and agents of the Registrant
are to be indemnified to the fullest extent permitted by law for
any liabilities of any nature whatsoever incurred in connection
with the affairs of the Registrant, except in cases where willful
misfeasance, bad faith, gross negligence or reckless disregard of
duties to the Registrant are established. See Article NINTH of
the Articles of Incorporation of the Registrant, as amended, for
a more complete description of matters related to
indemnification.
GAM Services Inc. ("GAM Services"), the Registrant's principal
underwriter, will be indemnified against all claims, demands,
liabilities and expenses which may be incurred by it arising out
of any untrue statement, or alleged untrue statement, of a
material fact contained in the Registrant's registration
statement or material omission, or alleged material omission,
therein.
<PAGE>
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISERS.
PAUL S. KIRKBY
Global Asset Management (H.K.) Ltd., 1801 Two Exchange Square,
Central, Hong Kong, investment adviser, director, 1985 to
present.
GAM (Asia) Retirement Scheme, 1801 Two Exchange Square,
Central, Hong Kong, trustee, 1986 to present.
Hanningfield Investments Ltd., 1801 Two Exchange Square,
Central, Hong Kong, investment adviser, director, 1987 to
present.
GAM Japan Inc. and GAM Pacific Inc., Craigmuir Chambers, P.O.
Box 71, Road Town, Tortola, British Virgin Islands, director.
Exeter Investments Ltd., 11/F Alexandra House, Central, Hong
Kong, investment company, director, 1987 to present.
NICHOLAS J. EELEY
Global Asset Management Limited, 12 St. James's Place, London
SWlA 1NX, England, investment adviser, director, 1984 to
present.
GAM Pacific Inc. and GAM Arbitrage Inc., Craigmuir Chambers,
P.O. Box 71, Road Town, Tortola, British Virgin Islands,
director.
DAVID J. MILLER
Global Asset Management (U.K.) Ltd., 12 St. James's Place,
London SW1A 1NX, England, investment adviser, chief financial
officer, 1987 to present.
GAM Fund Management Ltd., Dublin.
GAM Administration Limited, 11 Athol Street, Douglas, Isle of
Man, director.
ALAN MCFARLANE
Global Asset Management Ltd., 12 St. James's Place, London
SW1A 1NX, England, managing director (institutional), 1993 to
present.
DENIS G. RAEBURN
Global Asset Management Ltd. and Global Asset Management
(U.K.) Ltd., 12 St. James's Place, London SW1A 1NX, England,
managing director, 1987 to present.
Cellcom Limited, Denmark House, Staples Corner, London NW9
7BW, England, director, 1983 to present.
Global Asset Management (USA) Inc., 135 East 57th Street, New
York, NY 10022, director, 1990 to present.
Mr. Raeburn is also a director of various other companies
controlled by GAM and of various investment funds organized
outside the United States in the GAM group of funds.
<PAGE>
GORDON GRENDER
Global Asset Management (U.K.) Ltd., 12 St. James's Place,
London SW1A 1NX, England, independent contractor and fund
manager, 1994 to present.
Stephens Inc., 111 Center Street, Little Rock, AK. Consultant,
1995 to present.
Neilson Management Ltd., 65 London Wall, London, England,
January 1997 to present.
Cognito Ltd., 12 Swinegate, Leeds, England. Alternate
Director, January 1997 to present.
Foreign & Colonial US Smaller Companies plc, Exchange House,
Primrose Street, London EC2A 2NY, England, director, 1993 to
present.
Investco Overseas Holdings Limited, 81 Carter Lane, London EC4
5EP, England, director, 1987 to present.
Flexbale Limited, 2 Chapel Court, London SE1 1HR, England,
director, 1983 to present.
Adrian Berkeley & Associates Limited, The Estate Office,
Normanby, Scunthorpe, South Humberside DN15 9HS, England,
director, 1969 to present.
Mr. Grender also acts as portfolio manager for GAM North
American Unit Trust and GAMerica, Inc.
The directors and officers of Sarofim and their only
activities of a substantial nature during the past two years
are set forth in the Statement of Additional Information under
"Investment Advisers."
ITEM 29. PRINCIPAL UNDERWRITERS.
<TABLE>
<CAPTION>
(a) None.
(b) Name and Positions and Positions and
Principal Offices with Offices with
Business Address Underwriter Registrant
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Kevin Blanchfield Chief Operating Officer, Vice President
135 East 57th Street Treasurer and Treasurer
New York, NY 10022 and Director
Gordon E. Swartz Secretary Secretary
135 East 57th Street
New York, NY 10022
(c) N/A
</TABLE>
<PAGE>
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
The accounts, books and other documents required to be maintained
by Registrant pursuant to Rule 31a-1(a) of the Act are maintained
as follows:
Accounts and Records
Pursuant to Rule Location
-------------------- --------
31a - 1(b)(1) Brown Brothers Harriman & Co.
31a - 1(b)(2)(i) 40 Water Street
31a - 1(b)(2)(ii) Boston, Massachusetts 02109
31a - 1(b)(2)(iii)
31a - 1(b)(3)
31a - 1(b)(5)-(8)
31a - 1(b)(10)
31a - 1(b)(1) Chase Global Funds Service Company
31a - 1(b)(2)(iv) P.O. Box 2798
Boston, Massachusetts 02208
31a - 1(b)(9)-(11) GAM International Management
Limited
12 St. James's Place
London SWIA 1NX, England
Fayez Sarofim & Co.
Suite 2907
Two Houston Center
Houston, Texas 77010
31a - 1(b)(4) Coudert Brothers
1114 Avenue of the Americas
New York, New York 10036
ITEM 31. N/A
ITEM 32. UNDERTAKINGS
(a) N/A
(b) N/A
(c) Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest annual report to
shareholders for each series upon request and without charge.
<PAGE>
SIGNATURES.
Registrant has duly caused this Post-Effective Amendment to the Registration
Statement on Form N-1A of GAM Funds, Inc. to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York and State of New
York, on the 2nd day of March, 1998.
GAM FUNDS, INC.
Registrant
By /s/ Kevin J. Blanchfield
----------------------------
Kevin J. Blanchfield
Vice President and Treasurer
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, this Amendment to the Registration Statement has been
signed below by the following persons in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
Signature: Title: Date:
- ---------- ------ -----
<S> <C> <C>
/s/ Gilbert de Botton* President and March 2, 1998
- --------------------------------------------- Director
Gilbert de Botton (Principal Executive Officer)
/s/ Kevin J. Blanchfield Vice President/ March 2, 1998
- --------------------------------------------- Treasurer
Kevin J. Blanchfield (Principal
Financial and
Accounting Officer)
/s/ Roland Weiser* Director March 2, 1998
- ---------------------------------------------
Roland Weiser
/s/ George W. Landau* Director March 2, 1998
- ---------------------------------------------
George W. Landau
</TABLE>
*By: /s/ Kevin Blanchfield
---------------------
Executed by Kevin Blanchfield on behalf of those indicated pursuant to
Powers of Attorney filed herewith.
